The Wrap 10/19/10

{+++}The  market suffered its worst single-session drop in two months as market participants shrugged off a big batch of better-than-expected earnings and the dollar surged. After the close BSX, CREE, GILD, ISRG, JNPR, SLM, SYK, WDC and YHOO were the most notable names that reported. CREE was down 8% in the aftermarket so Mr. Market seems to be leaving Sally Technology at the dance for now.

All ten sectors were in negative territory, led by energy (-2.4%), materials (-2.3%) and health care (-1.8%).

Tomorrow morning before the open, one economic report is scheduled to be released: MBA Mortgage Applications (Consensus NA).

Tomorrow before the open of the many companies scheduled to report, some of the bigger names include: ABT, MO, BLK, BA, DAL, ETN, GENZ, MS, DGX, STJ, TXT, LCC, USB, and WFC.


The New York Fed is part of an investor group that owns more than 25% of the voting rights in over $47 billion of residential mortgage-backed securities issued by Countrywide Financial, the home loan giant that Bank of America owns.

Today, the group wrote to Countrywide Home Loan Servicing and Bank of New York Mellon Corp. , the trustee of the mortgage securities, saying they haven’t been serving the loans backing the securities properly.

The investors asked Bank of New York to demand the repurchase of loans that were originated “in violation of underwriting guidelines.”

The seller of any “ineligible or predatory” mortgages should also pay the cost of modifying them for homeowners, or buy those loans back from the pools of collateral backing the securities, she added.

Bottom line… Bank of America is screwed short term and it may drag on the sector and the market short term, we’ll see if Mr. Market can turn lemons into lemon aid at some point tomorrow, but for now let’s be cautious.

I have added some short names to watch in the coming days. Let’s be cautious and opportunistic, this market is bipolar.

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