The market has been having a great run over the past week, and we have been able to make a lot of great trades along with the movement. Today, however, the market appears ready to decline heading into a number of important economic announcements. Yesterday, our Short Sale of the Day did not work out to any avail. We missed our entry range by two cents in the morning in Tenet Healthcare Corp. (THC). The company dropped 5% intraday but our levels were just a bit too high. Our open position comes from Winnebago Industries (WGO), which is our Play of the Week. WGO has lost some ground since our entry at 11.25, but I am hoping for a big day from the company since they report tomorrow morning.

Let’s get started with two plays for today…

 

Buy Pick of the Day: Direxion Daily Real Estate Bear ETF (DRV)

Analysis: It appears that the answer to the title will be most likely not. We got some very poor news out of the housing market that is telling us what everyone was expecting and worse. Housing starts dropped 12% from last month and building permits dropped 6% after the housing tax credit expired in the month of April. May results were down from April. Further, it was worse than was expected as both hosing starts and permits came in below analyst expectations. The news quickly has driven futures down even further this morning. Core Producer Price Index stayed the same from last month, and most of the focus will be, therefore, on the housing data. Additionally, this morning FedEx reported weak 2010 FY outlook along with unexciting earnings, and the market looks ready to take some profits after a strong three out of four day run-up.

Therefore, we want to look towards an inverse housing ETF for our play of the day. Direxion Daily Real Estate Bear ETF (DRV) follows real estate REITs, but it is highly affected by housing starts and building permit news because most people associate it with the housing market. REITs will be weak if building permits are down because that means they are not building new properties. DRV has taken quite a stumble over the past week and a half, dropping over 25% in value. DRV has moved below its lower bollinger band, and it is heavily oversold on fast stochastics. The news, today, could propel this highly volatile stock…
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