For the second straight quarter, Toll Brothers provided a preliminary quarterly report that ignited the stock as sales volumes once again surpassed expectations. Robert I. Toll, chairman and CEO, explains:

Our fourth-quarter unit deliveries exceeded the high end of our range of guidance due to the delivery of a higher percentage of our backlog, fewer cancellations, and the sale of quick delivery homes.

On a strong market day, RIMM opened up over 2% and, at the time of writing, is up over 4% on the day. RIMM’s share repurchase period begins today, and, so far, so good for propping up the stock.

Yesterday, I expressed my doubts that RIMM would spend the entire $1.2B that its board authorized, but I failed to provide some historical background. It turns out that the current share repurchase program is much larger in scale to a one-year repurchase program RIMM initiated in 2005.

On November 5, Research In Motion (RIMM) announced a buyback of up to $1.2B in shares starting November 9 and lasting for up to a year. When I read this announcement, I pounced on the stock the minute pre-market trading opened. This was quite a mental exercise for me because I had just closed out the last of my puts on RIMM the prior week. However, given that part of my rationale was that RIMM appeared over-extended on the downside, I figured that positive news like this could pop the “over-stretched rubber band” back to the upside.

Much to my disappointment, RIMM opened for trading at my purchase price and within 45 minutes printed a fresh low on the day. That move punted me from the position with a very small loss. Two days and counting, the response to RIMM’s buyback announcement remains relatively tepid. It is as if the market is skeptical that RIMM’s share repurchases will amount to much. After reviewing RIMM’s balance sheet, I became skeptical of RIMM’s ability to spend the full $1.2B allocated for the buyback.

The current correction has produced a LOT of intriguing charts. The Brazil Index Fund ETF, EWZ, is certainly one of them (shown below). EWZ suffered its largest one-day drop since March, and it has now completed a roundtrip for its Olympics-driven rally. EWZ is now already down 12% from its closing 14-month high just last week.

Shortly after Brazil won the privilege of hosting the 2016 Olympic Summer Games, I wrote that Brazil presented much greater investment potential than the U.S. I am treating this correction as an attractive buying opportunity. I suspect that EWZ will reverse at least 20% from its highs. That point just happens to be $62 which represents the location of the last breakout from consolidation to fresh 52-week highs and a new rally.

Speculative stocks typically get hit the hardest during corrections in the stock market, and solar stocks definitely qualify for a beating. In the past 4 days of selling, TAN, the Claymore/MAC Global Solar Energy Index, is already down 10%. Solar stocks have been big laggards this year as TAN is now back to even on the year. See chart below:

As a group, solar stocks have gone nowhere this year

In “Market Cheers Over Ugly GDP Report“, Mike “Mish” Shedlock breaks down the components of the Q3 GDP numbers and laments that “I am struggling to understand what is surprising other than how bad this all looks once you break down the numbers.”

The surprise was that the annualized GDP of 3.5% was a smidge higher than the expected 3.2%. The stock market also held an air of relief as it bounced sharply off deeply oversold conditions. Stocks sold off aggressively going into this report, so I have to assume that fear was building that the GDP number would come in well below the expected 3.2%. What surprised me is that the higher than expected GDP number did not lead to fears that the Fed will discuss hiking rates in its meeting next week despite its insistence that rates will remain low well into 2010.

We do not believe that real demand…has really improved much since the end of last year, and we don’t see things in the economy from a flat roll standpoint or long product standpoint whether you’re talking automotive, construction, housing, non-residential construction, oil county[sic] goods or what have you, we don’t see that there is a real uptick in the demand…despite what a lot of people like to talk about in the press and maybe Wall Street, the segment of the economy that we serve which is the real core of the economy is not improving. – Dan Dimicco, Chairman, Chief Executive Officer, and President, Nucor Corporation (Q3 2009 Earnings Call, October 22, 2009)

The Wall Street Journal printed a trifecta of articles Monday that seem to cry out for the dollar to lift its head out of the sludge. Coincidentally (or not), the dollar rallied for its biggest one-day gain in almost three weeks.

In “Uncertainty May Help Dollar“, analysts remind us that the economic recovery remains fragile and monetary policies have become more uncertain:

The British pound has taken some sharp twists and turns since first hitting 4-month lows against the U.S. dollar on September 28. I have been steadfast in my bearishness against the pound since mid-September, but I have found it necessary to dance in and out of positions given the persistent decline in the dollar against all other major currencies and risks from “news headlines.” (Specifically, maintaining short-term trading horizons with tights stops above key resistance levels, re-establishing shorts on breakdowns, and locking in short-term profits).

Two weeks ago, a sharp relief rally began in the pound after Paul Fisher, head of markets and quantitative easing, claimed in an interview that the Bank of England is not directing the pound downward. A week later, the minutes from the last Bank of England meeting seemed to indicate that the BoE was anticipating economic news positive enough to freeze quantitative easing at current levels. In about 10 days, the pound was up 5% against the U.S. dollar – a relatively impressive move as far as currencies go. Not even disappointing U.K. retail sales numbers for September could eat into the gains for long.

After months of steady recovery and on-going increases in commodity prices, Bucyrus International (BUCY) has finally gone from tepid to bullish in its outlook.

During August’s conference call, Timothy Sullivan, President & CEO, declared that “we’re not as pessimistic as most but we’re certainly not optimistic” and it is “anyone’s guess” what specific revenues and margins will look like in the next two quarters. Last week, BUCY sounded almost unabashedly bullish about the global economy in its commentary and its guidance (all quotes from Seeking Alpha transcripts).

The last hour of trading on Wednesday was marred by swift, high-volume selling, an extremely rare sight in the current market. It seemed to come from “nowhere” but the signs of some kind of reversal have been building in some poor post-earnings trading in many big-cap names. I earlier pointed out that Intel (INTC) seems to have printed a near-term top.

Tradermike does an excellent job in compiling the poorly behaving post-earnings charts of several big cap stocks, and he includes evidence from the indices that some kind of key reversal may be in the making. While I thought that INTC’s stellar headline results signaled an earnings-related correction is no longer likely for this Fall, Doug Kass chronicles how this earnings season has actually under-performed despite some of the gloss we see from the headlines: “The Earnings Season Racket.”

Moments like these remind me how swiftly the tides can change in foreign exchange.

The minutes from the Bank of England’s meeting in October showed that all members now support leaving quantitative easing at its current level of 175 billion pounds. This unified support marks a change in particular for Governor Mervyn King who earlier argued for increasing the amount quantitative easing and has been quoted as essentially supporting a weaker currency. On this news, the pound added to its rally from recent days against nearly all major currencies. For example, at the time of writing the pound is closing in on September’s high of 1.67 vs the U.S. dollar. As of yesterday’s U.S. close, the pound was up as much as much as 4% from recent lows of around 1.57.

Yesterday, the Bank of Canada decided to maintain its exceptionally low interest rate of 0.25% and reiterated its commitment to hold rates this low until the end of the second quarter of 2010. This move stands in stark contrast to the rate increase implemented by Canada’s similarly resource-rich “G20 cousin” Australia just two weeks ago. In response, the Canadian dollar plunged 2% from the close the previous day.

Canada is not following in Australia’s footsteps even though it has declared the end of its recession:

Investors and traders were clearly impressed with Google’s (GOOG) third quarter earnings (see earnings call transcript) report on Friday sending the stock up 3.8% on 3 times average volume (for the past three months). Google is now up a whopping 79% for the year and is at 15-month highs.

There are of course many things to like about GOOG’s results, performance, and execution. I like to track GOOG’s net revenue metrics (see chart below) where I measure net revenue as gross revenue subtracted by traffic acquisition costs (TAC). These data are easily obtained from each of GOOG’s quarterly earnings reports. What strikes me is that, finally, GOOG’s year-over-year (YoY) net revenue growth rate has increased sequentially, from 4% in the second quarter to 8% in the third quarter. This is the first quarter-over-quarter increase in three years. If this blip represents a sustained bottom in the growth rate, GOOG’s stock could have a lot more upside from even these lofty levels.

The excitement over Intel’s Q3 earnings report (see earnings call transcript) has already worn off. After peaking as high as $21.60 or so in the immediate aftermath of the release (after hours trading), Intel (INTC) dropped as low as $20 Friday. While this is just a small amount below the pre-earnings close of $20.49, this drop has still created the dreaded “gap and crap” that typically signals a near-term top. The initial excitement (the gap) has quickly given way to eager profit-taking (the crap).

Note that rapidly fading excitement is nothing new to INTC. The chart above shows how INTC peaked in late August after its revenue guidance that beat expectations at that time. INTC’s stock did not recover until the day of the Q3 earnings report. Two faded gaps in a row at 52-week highs are bright red flags. (Even during the last bull market, INTC peaked one year into that cycle and revenues and margins peaked a year later!)

I have not reviewed T2108, the percentage of stocks trading above their 40-day moving average (DMA), or its close cousin T2107, the percentage of stocks trading above their 200-day moving average, since late April (click here for the review).

For most of the intervening weeks and months, the message has remained the same: Over-bought and strong uptrend. With the Dow Jones Industrials now back above 10,000 for the third time (version 3.0) in 10 years, I decided to honor the occasion by finally posting another review of T2108 and T2107. The chart below shows that T2108 has stayed above 70% for most of the rally off the March lows, indicating persistent over-bought conditions.