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Online Indices' Real-World Battle

Also, a contrary opinion on <I>Barron's</I> latest on manufactured housing stocks, and the new religion of selling the rally.
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Cliche Busters

"Buy the dip" has become such a mantra for investors in recent years, I wouldn't be surprised to see it used to sell something nonfinancial, like maybe

Fun Dip.

But "sell the rally" seems to be the market's catch phrase now, as was the case



Sept. 17 , John Bollinger, president of

, observed the

S&P 500

had bounced off its 200-day moving average the

prior day, a performance he found significant and constructive. But the technician was less optimistic on Friday.

"We continue to raise cash and thought we'd have a better environment to raise cash into. This has all the signs of being an unfriendly time," he said. "We're not putting out shorts yet, but if it would bounce, we'd short into it."

Some notable dissenters to the new religion of selling into strength include

Goldman Sachs'

Abby J. Cohen, who -- in so many words -- said "buy the dip" yesterday (without any obvious embarrassment or hesitation).

A little more humbled by the market's recent decline, Jeffrey Applegate, chief investment strategist at

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TheStreet Recommends

Lehman Brothers

, also defended the bullish view.

"Until the yen issue is resolved and investors get comfortable that the

Federal Reserve

is done, the market probably won't make a sustainable rebound. So we may have some more downside," Applegate wrote in a report made public this morning. "But not so much that we think one should be raising cash. We thus remain -- quite painfully at the moment -- fully invested."

If You Build It, Will They Come?

The latest


features a positive spin on manufactured housing stocks, which have been decimated in recent months. The article noted insider buying at major firms and offered (surprise!) positive comments from the treasurer of

Fleetwood Enterprises


and the director of investor relations at

Clayton Homes



But not everyone is buying the story.

"I'm a little more leery of a situation where insiders jump in because a stock suddenly got cheap than

one with a stock that's got consistent buying over time," said Robert Gabele, director of insider research at

First Call/Thomson Financial

. "The first buying after a drop is not a guarantee that bad news is over," especially in this era where company officials are fearful of shareholder lawsuits.

For instance, Gabele notes a "group of buyers" of

Cavalier Homes


in the range of 5 1/2 to 6 1/2, but the stock has traded well below that level. Today, it rose 1/2 to 4 7/16.

A better example of a housing stock with consistent insider buying is

Walter Industries


, which has repeatedly found support around 12 in the past year. The stock dipped 7/16 to 12 5/16 today.

"They're beyond the 'support the stock' stage," Gabele said. "It signals to me the bad news may be out." Another name Gabele likes is

Washington Homes


, which rose 1/32 to 6 13/32 today.

Conversely, Gabele observes some "sloppy" patterns in the charts of

Kaufman & Broad



Dominion Homes



As for the stocks mentioned by


-- which included

Oakwood Homes



Champion Enterprises


in addition to Fleetwood, Clayton and Cavalier -- Gabele said Oakwood looks attractive. Gabele said "an insider with a good collar in place closed the collar," which is akin to covering a short position.

But "it's early in the game," he continued. "It's encouraging to see some buying, but I'd be cautious. I don't think they're going to bottom in a V pattern. They may show more weakness."

Meanwhile, another source said being 'cautious' is insufficient.

Manufactured housing stocks are a "debacle," according to one hedge manager who has shorted several names in the group. "These things are going south -- to tapioca."

Some signs of distress include the bankruptcy of

Ted Parker Home Sales

and its units in July, which "sent ripples through the entire industry," the hedge fund manager said. Additionally, foot traffic and mortgage applications at some company-owned retail dealers "dropped off sharply in July, which is usually a precursor of leading demand going forward," he said. "


tried to pump up the industry, but you can see how much good that did."

As mentioned, Cavalier rose 1/2 today. Additionally, Clayton gained 1/16, Fleetwood rose 1 1/16, Champion was unchanged and Oakwood declined 3/16.

"They have the potential to go to zero," the source said. "The good news is the Street knows it, but they're not saying it."

Online Index Battle Royal

Late last week,

Merrill Lynch, Pierce, Fenner & Smith


Internet HOLDRs

(HHH:Amex), a security representing ownership in 20 online companies. The security trades on the

American Stock Exchange

under the symbol HHH. (For more on the product and its underlying stocks, see the firm's

press release.)

So I know what you're all wondering: Does this product threaten Internet Sector

index? Although

Triple-H happens to be the moniker of the current


champion, executives at

Merrill Lynch

deny their new offering is prepared to blindside that mightiest of Net proxies with a chair to the back of the head.

That's because the DOT is an index option while Merrill's product represents "a diversified basket of stocks," according to Silvio Lotufo, equity derivatives strategist at Merrill. Whereas index options are "primarily" used to hedge, "I think the typical retail investor would be using a basket security like HOLDRs for an investment purpose."

Another key difference is that the DOT is an equal-weighted index, while the HHH is weighted by market cap. Moreover, while the makeup of the DOT is subject to change, the HOLDRs is a fixed basket. Thus, if a constituent of the trust fluctuates in value or buys another HHH member, its weighting in the index will change accordingly. Furthermore, if an underlying member of the HHH gets bought out by a company outside the trust, it will not be replaced by the acquirer, Lotufo said.

"It's apples and oranges," said a source at the

Philadelphia Stock Exchange

, where the DOT trades. (

is not involved in the trading of the options and makes no profit from options trades.) "There are no grounds for comparison."

Unless, of course, you track the number of times either product is

mentioned on



Aaron L. Task writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at .