MON JUN 16 THOUGHTS

Short covering can be a powerful force. When people wait for the worst to happen- and nothing approaching the worst happens- people who happen to be short tend to panic to get out. This all sounds so obvious, but it really isn’t. On Friday, the strongest sector in the market was brokerage houses. On March 14, Bear Stearns slipped into deep-seeded trouble on that fateful Friday morning, taking the market with it. With all the tumult surrounding Lehman (LEH) this week, many people were expecting the same ahead of the weekend. When there began to be rumblings from within Lehman (LEH) that it was looking to be bought out, the prevailing attitude went from “who’s next” to “is everyone up for bid” which led to a burst of people rapidly exiting their positions. Mind you, many stocks like Wachovia Bank (WB) were still down, but in cases such as what occurred on Friday, do not try to guess where stocks will stop rising after such a bad spate…just go with the flow.

Overnight markets were up in Asia, very quiet in Europe, oil is down, and the dollar down slightly. State-side, the emphasis seems to be on the LEH earnings and a GE downgrade.

LEH- LEH is trading higher on its earning as I type this. If it stays positive pre-open and goes negative (especially post-open), it is a terrific short as earnings were merely in-line. If it gets negative pre-open and goes back positive, the stock becomes very difficult to trade the rest of the day.

AIG- CEO ousted. Stock should open higher. But, the thing is that just because there is a new leader does not necessarily mean that things will improve in the immediate-term. Thus, it is a short thru unchanged.

TITN- great earnings. Think it is an A-B-A2 in some fashion. Do not know what the price points are, but looks like a trade.

RAME/SNHY- Cramer stocks

ACAD- phase III trial failed. A-B-A2 of some type.

TEVA- positive phase III trial. Same theme today- A-B-A2, but will likely be harder than most as it is an ADR.

YHOO- has been weak all morning. GOOG up though; think if GOOG maintains positive ground pre-open that it is a short at unch.

Relative slim pickings. Good luck today.