MARKET BEAT: August 23, 2007

In Thursday’s first half, the bulls are beginning to realize a good deal already procured, as profit-taking quickly becomes the order of the day. As of 10:45 ET, the S&P500 “SPYder” () and Naz’100 () are fractionally mixed, up .12% to a slight decliner of .25% on plenty of well-deserved schnitzeling and fading happy headlines.

For a fifth straight session, the story of the day started off with the bulls cheering more financial relief. After the market closed last night, well on the NYSE at least, breaking news of a Bank of America () deal with mortgage lender Countrywide () sent ‘da futchahs soaring and presaged yet another good day for Wall Street.

The deal being cheered overnight and out-the-gate amounts to a very good one for the banker. “BofA” injected $2 billion into non-voting preferred (and very desirable) stock at the still beleaguered Countrywide () with a yield of 7.25% and conversion discount 17.50% or $18-a-share. Not too shabby and the announcement  viewed as a two-billon dollar vote of confidence by many, had investors showing their own enthusiasm with open market negotiations and handshakes all the way up to $26.10 last night and officially sanctioned session highs of 24.46 in Thursday’s opening minutes. Then another sort of reality kicked in.

Depending on where investors opt to make portfolio decisions from, maybe it was a 41% decline in the VIX or a 7.50% gainer in the S&P500 in very short order that’s been a likely influence in Thursday’s first half. For others, instrumental in the decision “to convert” and lock in their own recent negotiations bearing fruit, chalk it up to less inspiring and assuring words from another unwanted spotlight courtesy of some CNBC.

It would have been nice if they could have made room for a candid interview with George Hamilton. Instead, just as tanned but more relevant, Countrywide’s CEO Angelo Mozilo burned a few bulls early aspirations for a technical-based “Drive for Five.” Before the camera, his voiced opinion of a market environment “certainly not getting better” and one which could result in a recession has been enough to turn Thursday’s optimism into tidying up one’s own financial house. Intraday shares of BAC are up .13 cents at 51.78, while the beleaguered CFC sits a bit higher, up .83 cents at 22.65.

An additional reason to reduce those market-weighted portfolios comes courtesy of the somewhat quieted credit market situation. Fresh and unwanted news out of Home Depot () is sending shares down .80 cents to 33.97. The latest is the already deteriorated deal for selling its building supply unit is now apparently on the cusp of folding altogether, as investment bankers in on the potential buyout have become increasingly less secure about pressing forward. And finally, ratings agency Moody’s () announced a review of homebuilders () Centex (), Lennar () and Pulte () for potential downgrades of their debt. After a rather impressive “buy the news” attempt, some intraday schnitzeling has put those existing bottoms, still, a work in progress.

GROWTH & MOVERS COVERAGE

EARNINGS CALENDAR

Select reports scheduled after the market close:

REPORT CALENDAR

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INDICES & MARKET MOOD

Elsewhere and entering the second-half, earnings news has been a mixed bag of reports spearheaded by retailers. As important, investor reaction has been equally fragmented and unimpressive for anyone but those already “in it to win it.” Names such as Abercrombie (), Limited (), Mens Wearhouse (), Zumiez () and Gymboree () give a glimpse at what some are snapping up, but mostly returning in a session marked by well-deserved, well-respected and still very light profit-taking.

Chris Tyler
Staff Writer & Options Strategist
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