Falling Right Into Place

Good morning. An inline CPI this morning is being received very positively. Meanwhile, housing starts in July fell 2.5% to 1.795 million units (consensus was 1.81 million) while building permits fell 1.747 million units (consensus was 1.84 million). In short, expectations that the Fed will remain on hold have increased along with overall sentiment for today's trading. Bernanke's prediction of lower inflation is going to be given the benefit of the doubt. As we all know, perception is everything.

Stocks trading higher in premarket this morning include SNDA, CRXL, IIJI, XLNX, CVTX, CELL, LU, ANF, CTRN, NTLI, RMBS, REV, PEIX, HSOA, QCOM, BEAS, ASMI, and BLI. Notable premarket losers include DAKT, GRMN, LWAY, PETM, ROST, KLAC, AMAT, ATML, DELL, FRO, and CNCT.

The bulls can't blame the headlines which have been falling right into place for them all this week. First, we have Middle East peace and then inflation headlines that have taken the fear out of the market. Combine that we a group of traders who've been religiously shorting and selling into strength, and it is difficult to imagine a better script to play out for the bulls as the sheer majority remain wrongly positioned (including yours truly). While we should begin to see more option expiration related activity today (i.e. more volatility), the bulls certainly have the ball. It's been awhile since that we've seen that.