Tuesdays Market

Subprime woes seem to be the talk generating a great deal of fear amongst traders. There are articles popping up here and there about some big name hedge and mutual fund managers who have taken whopper hits in the meltdown. Housing and building stocks have gotten hit pretty hard on the theory that if subprime borrowers are locked out of the market, then the low end of the housing market is going to slow, leading to problems for those who want to sell their houses to "step up" to something bigger. Stocks like USG have gotten hammered, (the secondary offering announced yesterday didnt help either) in part due to fears of this slowdown in housing.

On the bright side, Goldman announced earnings this morning and they were stellar. The brokers are showing strength, while the banking index languishes, again due to subprime fears.

I am 65% invested even though I remain bullish. One reason for this is that noone really knows what the fallout might be as it relates to subprime, although my gut tells me it is already priced in. I thought yesterdays action was really positive. It is hard to be "all in" when there is so much fear out there that we will retest the lows that we saw two weeks ago.

So I pick away at stock I like, such as GR, ITT, WTS, BA, GSF, UPS and YHOO. I also bought some yen few days ago, which you can now do through an ETF, symbol FXY.

Finally, Carl Icahn announced this morning a bid for WCI at 22.00. Yesterday D.E. Shaw filed a 13g that they owned 5% of this stock, joining nearly every other quality hedgefund out there, including SAC capital. I bought some near 22 today figuring that this was his first volley and that this money didnt enter WCI to get taken out at 22.00. It is trading as I write this at 22.25, slightly above his bid. This is speculative and not for the faint of heart.

Happy trading....and "be careful out there"