According to the recent TIM (Trade Ideas Monitor) report for the week of November 6-12, 2009, the TIM Sentiment Index (TSI) fell 1.05 points to 54.44, staying within bullish territory (see last week's post and the youDevise website for additional information on the TIM report, a reading above 50 is bullish).

The drop in the TSI Worldwide Index was much larger, falling 5.60 points to 51.74, but still staying in bullish territory. Eight of the ten sectors were in bullish territory with the remaining two bearish. Total new long ideas as a percentage of all new ideas sent to investment managers by way of the TIM increased 0.41 points to 73.61%.

Toll Brothers Inc. (TOL) was the belle of the ball yesterday with news of orders surging 42%, cancellations slowing and revenue beating analysts’ estimates. “The improvement in consumer confidence over the past year, the increasing stabilization of home prices, the decline in unsold home inventories and the reduction in buyer cancellation rates suggest that the new home market should be improving. We sense that it is, though slowly,” was how Chairman and Chief Executive Officer Robert Toll put it during the company's earnings conference call yesterday.

Were this pre-2007, there might be something to cheer in TOL’s results although as I write that, pre-2007 would probably have to be pre-2000 as Alan Greenspan’s pedal to the metal approach to monetary policy had distorted everything leading up to the bubble bursting almost as much as letting Lehman Brothers (R.I.P.) fail pushed the fear level as high as the bubble had risen, taking the world’s markets to equal but opposite extremes.

Toll Brothers (TOL), Bank of America (BAC), Wells Fargo (WFC), Ormat Technologies (ORA), Kimberly Clark (KMB)

Here is a list of stocks which traded higher Wednesday November 11, 2009 on unusually higher volume. I will keep an eye on these stocks Thursday to see if there is continued buying pushing the stocks higher. This method is just one of the ways I use to pick stocks to structure particular option trades. This post requires the knowledge of stock options. To learn more about the option strategies outlined in this post, risks, pricing, calculations, other strategies, and options in general, click here.

The table below shows the company, ticker, per share % increase, and volume increase (% increased compared to 50 day average). For your convenience I have ranked the stocks in order from greatest to least volume % change.

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.

Six straight days of gains for the Dow Jones Industrial Average is impressive, but yesterday's session is the inverse of recent days that began slow or even under pressure only to fight off resistance and close in the plus column. It goes without saying (or writing) that the market needs to take a pit stop, or for some a freefall, to get back to the long-term trend.

Of course, that being said, there is also an underlying angst that the market can't stall or can't afford to be down for too long. Considering how quickly the NASDAQ Composite gave up 5.0% just a couple of weeks ago there is certain fragility to the rally that has been built on very light volume.

F4Q09 Outlook Call

November 11, 2009 2:00 pm ET

4:19 PM, Nov 11, 2009 --

• NYSE up 28.9 (0.4%) to 7,155.36.
• DJIA up 44.3 (0.4%) to 10,291.
• S&P 500 up 5.5 (0.5%) to 1,099.
• Nasdaq up 15.8 (0.7%) to 2,167.

GLOBAL SENTIMENT

Tilson is saying what I have been saying, namely that March saw an increased number of attractive buys, but most of these are now fully priced. As a result, he is selling equities – even building up his net short positions.

Unlike bear turned bull Richard Bernstein, Tilson says that after a huge 60%+ run up which saw a trebling or quintupling of some beaten up shares like Huntsman, you need to be cautious. Invest in high quality and low beta, he says – exactly the opposite of what Bernstein is now saying.

New home sales came in at 31 thousand for September which disappointed investors who had been hoping for more like 34 thousand. The market worried that the real estate market had once again fallen off a cliff as the home tax credit was ending. When the numbers came out, the homebuilders sold off brutally. I think we have to keep these numbers in "historical" perspective. This year's dismal home sales are way below just about anything that has been seen in 45 years.

Between February 1990 until October 2008, no single month came in at less 32,000. Between January 1963 to January 2008, only 18 months came at less than 32,000 and many of these occurred in the 1960s and early 1970s. This September was the worst September since 1981. From 1998 to 2007, Septembers ranged from 53,000-94,000.

New Home Sales fell a seasonally adjusted -3.6% in September, defying expectations of a rise of 5%. September marks the first time in six months new home sales have fallen. The pending end of the first home buyer tax credit may have something to with the September numbers given that new home sales needs to occur well before the handout finishes to qualify.

Thursday night there were several additional developments on stories I have ran over the week and I will spend time on them. I will close with a more philosophical musing inspired by one of my favorite authors.

How Do You Write Anything After This?
In what is perhaps the ultimate summation of all things finance, I submit this take from Jesse's Cafe Americain:

The home builders represent probably the most "humbled" group of stocks out there, a result of a housing debacle that has seen falling home prices, credit shortfalls and waves of foreclosures.

Home builders also represent some of the best "upside" in the market. The stocks have fallen hard, some trading at one fifteenth of their 2005 share prices. And those share prices have fallen so low that the thirteen "biggest" builders total collectively less than $22 billion in market cap. To put the number in perspective, 138 publicly traded companies in the U.S. trade at market caps of $22 billion or higher. Corning (GLW), Costco (COST), DirectTV (DTV), Potash (IPI), and Ford (F) each have market caps higher than the sum total of all publicly traded home builders. Add up TOL, LEN, PHM, NVR, RYL, MDC, SPF, HOV, BZH, KBH, DHI, MTH, MHO and you get the price of Ford.

Sentiment

Stocks are holding gains late Thursday after Alcoa (AA) moved higher on earnings and the day's economic data didn't disappoint. Alcoa is up 2.2 percent and one of 23 Dow stocks moving higher after the aluminum company reported a 4-cent per share quarterly profit Wednesday afternoon. Analysts were looking for a 9-cent loss.

Pepsico (PEP) also beat on earnings and many of the retailers, including Target (TGT) and Macy's (M), are seeing strength after posting better-than-expected September same store sales numbers. Energy, metals, and mining names are broadly higher after crude oil rose another $2 to $71.57 a barrel and gold gained $12.40 to $1056.80 an ounce.