MORNING BULL

DJIA Futures up 35 on the heels of the AA takeout rumors, the GM upgrade by MER and the big buyback announced by MMM.

The VXO has generated a buy signal with its close at greater than 110% of its 10 day SMA. A second buy signal of over 70 on a 5 period RSI also hit so it all may be lining up. Here is where I posted the testing on the volatility indexes a long long time ago.

We also have the buy signals on the 2 day RSI under 10 on the DJIA/SPX indexes and the buy signal of the TV gurus calling for a pullback as the markets are "generally" overbought having run far and fast.

In the news- BHP and RTP both supposedly eyeing AA; SNE to cut back substantially on chip spending; JEF upgrades RHT; DB upgrades LVLT; JPM upgrades MA; TEVA misses by 5 cents and guides in line for 2007; GS downgrades HANS to Neutral from Buy; WB upgrades BAM to outperform from market perform and says earnings potential of power operations business continue to be underappreciated; GRP upgraded to Buy at BofA and target raised to $57 from $49; MMC beats by 2 cents, revenues $3.1 vs $2.93 consensus; GM upgraded to Buy and F downgraded to sell at MER;


Cramer is bullish on MRVL NOV ATI RIG VMED CFC AGN MSFT ZMH AMR and CAL.

Cramer is bearish on ESLR HP NEW and JBLU.

This is what Bernie Schaeffer wrote yesterday about his expectation for this week:

"Judging by the market's past performance during option expiration week, stocks could be poised to make some gains this week. In columns prior to the January and December expirations, I touched on this trend in the Standard & Poor's Depositary Receipts (amex: SPY) to post positive results during expiration week.

I think one potential reason for the upside bias in expiration weeks is the unwinding of heavy out-of-the-money puts that accelerates during that week. As these out-of-the-money puts are bought back to capture what little time value is left, those who took the other half of the trade and sold the puts are able to buy back the SPY shares they sold as a hedge against the short put position. This unwinding action in turn helps to add buying pressure to the SPY during expiration week."

Since January 2006, the SPY finished only four expiration weeks in negative territory, while the average return during the week comes in at a gain of 0.55%."


And in the continuing call for the flip to large caps as they are far cheaper then any other category, eh no, as the SPX is +1.1%, DJIA +.07%, Small caps +2.3% and the Middies +4.7% as of yesterdays close.