Regarding the news about rise in mortgage applications last week, Mr. Mortgage has this to say:

The number that comes out tomorrow will be mostly wrong. Not ’somewhat’ or ’slightly’ but ‘mostly’ wrong. While lenders did get a surge of business that is new to them most is not new business. When rates come slamming down in a very short period of time like we saw last Tuesday very little new business is originated that day. My best guess is that of all the loan applications being counted last week that 85% of them were a result of a loan that was pulled from another lender for a better rate elsewhere.

Read the full stuff here.
http://mrmortgage.ml-implode.com/

A major unknown, of course, is how much of the relentless printing by the feds going to re-inflate the stocks. I simply don’t want to gamble on this possibility.

NASDAQ just turned green, DOW and S&P at the best levels of the day – reversing earlier losses. I would sell this rally too.

For a variety of reasons, which include the quadruple witching options expiration ahead of us, I see the next 3 weeks as the major battle between the bears and bulls. Bears are armed with reality and fundamentals, and some loot amassed from the last 15 months. Bulls have more freshly minted money thrown at the big banks by the Feds.

It is difficult to tell who will win this major battle, but I am betting heavily on the bear side. If bulls win, the bears will come back in 2009. If bears win, the war will essentially be over.

I do think that the new bull will be born only after bears prevail and win this war. However, I suspect there will be a lot of casualties on both sides.

Targets for the three – retest of the lows for CMC and HOT (6.25 and 11, or even sub 10, for HOT)

FCX Target $9 in two weeks.