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2/11/2010 1:20:34 PM Eastern Time

Not Sure Why…But We'll Take It
By Charles Payne, CEO & Principal Analyst

You have to love the intraday reversal of the market today, although one has to wonder why it was off to begin with. Before the bell, there was word of a resolution of the situation in Greece and initial jobless claims beat consensus. Okay, I admit the situation in Greece will be flaky in reality for a long time and the initial jobless claims number was something to cry about not cheer. But, the market needed something to cling to, and these are two difficult areas. Now that there is some action to the upside it's lacking the critical element of convincing volume. Hey, beggars can't be choosy. Moreover, weak volume was part of the market in 2009, but the rally never ran out of steam. The housing market seems to be in play today as homebuilder stocks are substantially higher even after mixed news on the foreclosure front.

Foreclosure Trends
David Urani, Housing Analyst Wall Street Strategies

According to RealtyTrac, foreclosure filings decreased by 9.7% from December to January, although year over year comparisons remained constant at a 15% increase (foreclosures increased 15% from November to December as well). The market seems to be taking the report positively, although we would be cautious, considering we saw a similar sequential drop last January that turned out to be just a speed bump amidst quickly rising foreclosures. We are also inclined to take foreclosure readings these days with a grain of salt, perhaps a handful of salt; banks, Fannie Mae, Freddie Mac, and the government are all experimenting with several different alternatives to foreclosure, which is causing delays in the pipeline, but a good portion of these loans that are being delayed are still expected to be foreclosed on.

Another thing to worry about is the high levels of bank repossessions. Despite total foreclosure filings being up 15% year over year, actually repossessions (industry jargon uses the term "REO" which stands for real estate owned property) of homes by banks are up 31%, indicating that vacant homes are actually hitting the market faster than they were a year ago. Given that fact, and the idea that foreclosures are still above the 300,000 level, it's clear the housing market is still in crisis mode.

Interestingly one of the larger public homebuilders, Lennar (LEN), today announced it purchased approximately $3.0 billion of mortgages that the FDIC picked up from failed banks. The purchase price was $243 million, a steep discount. This could be taken as a sign that Lennar expects delinquencies to moderate, but we see it more of a bargain pickup; it seems like the majority of those mortgages could still go bust and Lennar could would still be able to make a profit.

Technical Point of View

It's good that the Dow Jones Industrial Average is above 10,000 and fought for dear life whenever that number was challenged, but the big news comes when the index gets above 10,200 and finds the catalyst(s) to breakout through 10,500.

Long Idea: Sanmina Corporation (SANM) @ $14.16
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Trading Parameters
Entry Price	Entry Limit	Stop Loss	Trading Target	Target	Long-term Target	Options
$14.16	see comments	N/A	N/A	$20	$25.00	N/A
Options Trade Parameters
Type	Option Symbol	Entry Price	Strike Price	Expiration Date
Call	YNS100717C00	$1.80	$15.00	7/17/2010

BACKGROUND: Sanmina-SCI Corporation is a leading electronics contract manufacturer serving the fastest-growing segments of the global Electronics Manufacturing Services (EMS) market. Recognized as a technology leader, Sanmina-SCI provides end-to-end manufacturing solutions, delivering superior quality and support to OEMs primarily in the communications, defense and aerospace, industrial and medical instrumentation, multimedia, enterprise computing and storage, renewable energy and automotive technology sectors. Sanmina-SCI has facilities strategically located in key regions throughout the world. More information regarding the company is available at http://www.sanmina-sci.com.

SKINNY: This used to be one of the hottest names in technology back in the day, but the company hasn't faded away. On the contrary, the company employs almost 32,000 people in 18 countries around the world. But the outsourcing business was running dry. That seems to be changing. The company has exposure to communications, enterprise, multimedia, industrial, and the automobile business. The recent earnings results saw a handsome beat, and management offered upside guidance. Right now the Street is modeling for $1.09 per share for FY10 (ends September) up from $0.59 per share, and $1.54 per share from $0.89 per share on FY11. Technically, a break out through $15.00 sees a clear shot to $20.00, then longer-term to $25.00. Note: THIS IS A HIGH BETA STOCK…that means it can be volatile. Know this upfront that it is unlikely we would stop out unless there was a material change in the fundamentals, so nervous investors keep that in mind.

Key Fundamentals
PEG	Book Value	Institutional Holdings	Price/Sales	Average Daily Volume	Shares Outstanding
0.78	7.443	70	0.21	665K	78.61M
Market Value	Insider Activity	52-week High	52-week Low	Annual Earnings Estimate
1.11B	1 Buy 1 Sell	14.55	0.73	1.09

Analyst Coverage
Credit Suisse- Upgraded to NEUTRAL