Options expert and stock trader Bernie Schaeffer combines fundamental, technical and sentiment-based metrics to select his specific trades.

In his latest The Options Advisor, he looks at a trio of diverse trades: wireless semiconductor play, Broadcom (NASDAQ: BRCM); homebuilder, Ryland Group (NYSE: RYL); and miner, Southern Copper (NYSE: PCU).

"Broadcom has rocketed up the charts in 2009, racking up a year-to-date gain of about 74%. The stock has stair-stepped consistently higher since January, capitalizing on support at its 10-week and 20-week moving averages.

"BRCM's relentless upward momentum has forced many short sellers out of their bearish positions, as short interest on the equity dropped by nearly 20% during the past month.

General Motors Corp. (NYSE: GM) and Ford Motor Co. (NYSE: F) may get help from the Bush administration. President Bush said in an interview today that "an abrupt bankruptcy for the autos could be devastating for the economy." He signaled he may use TARP funds for that, but didn't provide a timeline or other details. GM shares are up 4.8% in premarket, Ford's shares are up 2%. Shares of both opened about 3% higher.

Goldman Sachs Group Inc. (NYSE: GS) and Morgan Stanley (NYSE: MS) probably will report fourth-quarter losses this week on shrinking asset values and a decline in fees for businesses. But even the deep cost cutting measures the investment firms -- now turned banks -- may not help help shareholders enough as the companies face another year of slumping revenue. The demand for their services is and will continue to be limited in what is the worst financial crisis since the Great Depression. GS shares are down 2% in premarket trade.

Banco Santander (NYSE: STD), Nomura (NYSE: NMR) and Royal Bank of Scotland (NYSE: RBS) are among the victims ex-Nasdaq Chairman Bernard Madoff' $50 billion Ponzi scheme. Santander said its customers had an exposure of around $3.1 billion, while Japan's Nomura has an exposure of around $302 million. STD shares are down 1.5% and RBS shares up 1.7% in premarket trade.

[Update 10:00 am:
Huntsman Corp. (NYSE: HUN) shares were down about 35% a little after the open after it has ended its $6.5 billion agreement to be taken over by Hexion Specialty Chemicals Inc. and agreed to a $1 billion legal settlement.
Apple Inc. (NASDAQ: AAPL) shares were down about 4% a little after the open on a downgrade. Goldman Sachs downgraded the iPhone and Mac maker to Neutral from Buy due to deteriorating consumer spending.
JPMorgan (NYSE: JPM) shares slumped nearly 6% after a Merrill Lynch analyst downgraded JPM to Underperform from Neutral.
Honeywell (NYSE: HON) shares gained nearly 7.5% after the manufacturer affirmed a lower 2009 outlook and said it expects profits to fall 6% to 16% as the deepening global recession hits markets it serves.]

TheStreet.com's Jim Cramer says the scope of this crisis needs to be recognized.

The real deal is upon us. The October session that we always seem to get, the one that looks like we need intraday Fed meetings and lifelines to banks and a flood of liquidity and ... oops, we've already done that!

Yep. So often we have had the real hideous looks, only at the last minute to have the darned defeat we need to start over be defeated by some optimistic yahoos who come out of the woodwork and say, "buy, buy, buy!"

I don't want it to happen this time. We have to have some recognition that Ford (NYSE: F) (Cramer's Take) and GM (NYSE: GM) (Cramer's Take) and Chrysler matter and that they are all teetering, that the Boeing (NYSE: BA) (Cramer's Take) strike is going to soon shut down the part of American manufacturing that is not auto and that housing took a step down last month of unfathomable proportions. If you don't believe me, go read the Ryland (NYSE: RYL) (Cramer's Take) release: cancellations spiked up again! We will not hold those July lows that now make the HGX housing sector index run up look like a total ploy to make us feel better. When are Horton (NYSE: DHI) (Cramer's Take) and Pulte (NYSE: PHM) (Cramer's Take) going to merge anyway!

MOST NOTEWORTHY: BP Plc, Tenet Healthcare Franklin Resources were today's noteworthy upgrades:

• Lehman upgraded shares of BP Plc (NYSE:BP) to Equal Weight from Underweight on valuation and positive benefits from the company's TNK joint venture in Russia.
  
• Lehman also upgraded Tenet Healthcare (NYSE:THC) to Overweight from Equal Weight, citing increased confidence the company can meet guidance following the company's analyst day.
  
• Keefe Bruyette upgraded shares of Franklin Resources (NYSE:BEN) to Outperform from Market Perform as they believe flow trends have improved.

OTHER UPGRADES:

• Goldman added Allied Waste (NYSE:AW) to its Conviction Buy List.
  
• China Unicom (NYSE:CHU) and China Netcom (NYSE:CN) were raised to Hold from Sell at Deutsche Bank.
  
• UBS upgraded Ryland (NYSE:RYL) to Buy from Neutral.

MOST NOTEWORTHY: Suntech Power, Premier Exhibitions and the Homebuilders Sector were today's noteworthy initiations:

• Citigroup named Suntech Power Holding (NYSE: STP) their top pick for China solar due to its leading scale and technology roadmap for higher cell efficiency, initiating shares with a Buy rating and $55 target.
  
• Merriman believes Premier Exhibitions (NASDAQ: PRXI) can move to the $14.50-$17.00 through the continued monetization of the company's current tours, the launching of additional tours and the value of the Titanic artifacts on hand. The firm started shares with a Buy rating.
  
• Lehman initiated D.R. Horton (NYSE: DHI), Ryland Group (NYSE: RYL), Toll Brothers (NYSE: TOL) with Overweight ratings and an $18 target, $31 target and $27 target; KB Home (NYSE: KBH) with an Equal Weight rating and $24 target; and Hovnanian Enterprises (NYSE: HOV) with an Underweight rating and $8 target.

OTHER INITIATIONS:

• Citigroup initiated Yingli Green Energy (NYSE: YGE) with a Hold rating and $24 target.
  
• UBS initiated Citrix Systems (NASDAQ: CTXS) with a Neutral rating and $38 target.
  
• JP Morgan initiated Biodel (NASDAQ: BIOD) with an Overweight rating.

Have home builders got an offer for you: sign a contract to buy a home and, if comparable homes in the area decline in value before closing, you can have the home at a reduced price.

According (subscription required) to the Wall Street Journal, companies including KB Home (NYSE: KBH) and Ryland Group (NYSE: RYL) hope such "price protection" guarantees will lessen consumers' paralyzing fears about buying real estate whose value is falling and get them sign on the dotted line, bring in much-needed cash and reduce high cancellation rates.

KB will roll out its price protection program in 35 markets this month. The move is an effort to move some impossible-to-sell new houses, and try to toss buyers a bone that will keep them from walking away from their down payments.

As an investor, I wonder whether this a sign of absolute desperation on the part of home builders, or is it a more bullish indicator that executives don't feel there's much risk in assuaging customers' fears with an offer to compensate them if the home declines in value before closing.

I would say the first option seems more likely.

TheStreet.com's Jim Cramer says until the public feels they won't lose money on a home, no problems will get solved.

Would you ever buy a house in this environment? That's really the ultimate question that has to be asked -- that the Fed should be asking -- if this junk is ever going to come back to life.

I know some of it is so short-term that the jury's back and the verdict is guilty, but most of it hinges on a simple issue: housing depreciation. If you think that your house is going to lose value, default on the second home lien. Which then, we know now, means defaulting on the ultimate mortgage.

The Fed can tinker with LIBOR (I still can't believe they wasted the banking system's time with the LIBOR/auction plan). It can issue statements that are a little more pro-growth than neutral.

Or it can try to change the psychology of the home buyer and homeowner.

The Ryland Group Inc (NYSE: RYL), the California-based homebuilder, released preliminary results last night. What continues to be most striking about homebuilder results is the magnitude of cancellations, suggesting either how widespread speculation was or how difficult it is for new homebuyers to get financing.

Cancellations were approximately 34 percent of gross orders for the quarter, compared to 35.9 percent in the second quarter 2006. Preliminary closings totaled 2,461 units in the period, compared to 3,803 units in the second quarter of 2006, a decline of 35.3 percent.

These are simply huge numbers. Add to this the shakeout that continues to unfold in the mortgage market as hedge fund and investment firms have to mark their portfolios to market for less liquid holdings, suggesting the housing and mortgage market still have a long way to go before the industry's problems are behind them.

Why does it seem that Citigroup Inc. (NYSE: C) is late to the homebuilding slump? Because they are. The housing sector has been in the dumps for months now and yet only this morning did Citigroup downgrade stocks in the sector. Citigroup downgraded D.R. Horton Inc (NYSE: DHI), Hovnanian Enterprises Inc (NYSE: HOV), KB Home (NYSE: KBH), Lennar Corporation (NYSE: LEN), Pulte Homes Inc (NYSE: PHM), Toll Brothers Inc (NYSE: TOL) and The Ryland Group Inc (NYSE: RYL) to Hold from Buy as they believe "shares will remain range-bound through the rest of the year."

Let's recap:

KB Home: The company reported a second quarter loss and sales hit three-year lows. The loss was partly due to land value-related charges that highlighted the continued decay of the U.S. housing market. The company also said it was unable to provide investors with a full-year earnings forecast and couldn't say when they thought conditions would improve.

Lennar: Reported a Q2 loss. The company said market conditions had eroded so much that it's not trying to limit its losses for the year.

Pulte Homes: In response to the "challenging operating environment that continues to exist in the U.S. homebuilding industry," the company announced a restructuring plan designed to reduce costs and improve operating efficiencies in May.

Get the picture? Here's one more:

Ryland Group: Reported a Q1 loss in April and said it wouldn't be able to provide new guidance due to the slump in the housing market.

See a pattern? Homebuilder after homebuilder, it's the same story -- company faces challenging housing market, company loses money, tries to regain profitability. You'd think Citigroup would have noticed.

Aside from the companies themselves, other firms and analysts have said their piece about the sector. March data showed sales of existing homes fell to a four-year low. In April, Census Bureau data showed there were 2.5 million vacant non-seasonal housing units for sale, way over many firms' predictions. Additionally, AG Edwards said on April 30th that "it is not a good time to buy shares yet." Standard & Poor's said in May that they believed over a third of all U.S. homebuilders were "vulnerable to rating downgrades" in the midst of a "three-year downturn."

This is not news. Maybe Citigroup just missed it.

MOST NOTEWORTHY: Genesit Energy LP (GEL), EnerNoc (ENOC) and Comcast (CMCSA) were today's noteworthy initiations:

• Genesis Energy (AMEX: GEL) was initiated with a Buy rating and $40 target at Stanford, as the firm believes the company's affiliation with Denbury Resources and pending acquisition of petroleum products, terminals, and transportation businesses from the Davison family will drive rapid growth.

• EnerNoc Inc (NASDAQ: ENOC) was initiated with a Hold rating and $42 target at Jefferies, due to valuation. EnerNoc was also initiated at Morgan Stanley with an Equal Weight rating and $40 target.

• Stifel expects Comcast (OTC: CMCSA) to benefit from higher penetration levels of DVR and HDTV set-top boxes over the next several years and initiated shares with a Buy rating and $34 target.

OTHER INITIATIONS:

• Select asset managers were initiated at Credit Suisse:

• AllianceBernstein (NYSE: AB), Affiliated Managers (NYSE: AMG), Fortress Investment (NYSE: FIG), Invesco (NYSE: IVZ), Franklin Resources (NYSE: BEN) and T Rowe Price (NASDAQ: TROW) were initiated with Outperform ratings.

• Blackrock (NYSE: BLK), Calamos Asset Mgmt (NADAQ: CLMS), Eaton Vance Corp (NYSE: EV), Federated Investors (NYSE: FII), Janus Capital (NYSE: JNS), Legg Mason Inc (NYSE: LM) and Waddell & Reed (NYSE: WDR) were initiated with Neutral ratings.

• Deutsche Bank initiated Ryland Group (NYSE: RYL) with a Buy rating and $52 target, as well as Pulte Homes (NYSE: PHM) and Meritage Homes Corp (NYSE: MTH) with Hold ratings and a $23 target and $29 target, respectively.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Small-cap banks, Garmin Ltd (GRMN), Force Protection, Inc (FRPT), D.R. Horton, Inc (DHI) and Ryland Group, Inc (RYL) were today's noteworthy initiations:

• Stanford initiated shares of American Community Bancshares (NASDAQ: ACBA), BNC Bancorp (NASDAQ: BNCN), Cooperative Bankshares, Inc (NASDAQ: COOP) and Yadkin Valley Financial Corp (NASDAQ: YAVY) with Buy ratings. The firm started Capital Bank Corp (NASDAQ: CBKN) and Southern Community Financial Corp (NASDAQ: SCMF) with Hold ratings. Stanford believes North Carolina is a great opportunity for investors who look for inexpensive community banks operating in growing markets.
• Elsewhere, Garmin Ltd (NASDAQ: GRMN) was initiated with a Sector Outperformer at CIBC with a $67 target.
• Thomas Weisel started Force Protection Inc (NASDAQ: FRPT) with an Overweight rating, as the firm believes the mine-resistant vehicle market is real and has staying power.
• Morgan Stanley initiated both D.R. Horton, Inc (NYSE: DHI) and The Ryland Group, Inc (NYSE: RYL) with Equal Weight ratings.

OTHER INITIATIONS:

• Clearwire Corp (NASDAQ: CLWR) was the most favored initiation today, with coverage started in at least nine firms: Merril, ThinkEquity, Jefferies and Stifel all started Clearwire with a Buy rating, Morgan Stanley and JP Morgan started it with an Overweight rating, Raymond James and Wachovia started it with an Outperform rating and Bear Stearns started shares of Clearwire with a Peer Perform rating.
• Credit Suisse started Healthways, Inc (NASDAQ: HWAY) with an Outperform rating and $60 target.
• Wachovia started DCT Industrial Trust Inc (NYSE: DCT) with a Market Perform rating.
• Caris initiated Circuit City Stores, Inc (NYSE: CC) with an Average rating, as the firm believes Circuit City is still playing catch-up in the customer centered approach and services venues, and notes shares trade at premium earnings ratios to Best Buy Co, Inc (NYSE: BBY).

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Today's noteworthy upgrades include ConAgra Foods, Inc (CAG), Dell Inc (DELL), Ryland Group, Inc (RYL) and Volterra Semiconductor Corp (VLTR).

• Prudential upgraded shares of ConAgra Foods Inc (NYSE: CAG) to Neutral from Underweight with a $26 target on valuation.
• Pacific Crest upgraded shares of Dell Inc (NASDAQ: DELL) to Outperform from Sector Perform as the firm believes new management, new products and supply chain cost realignments could boost operating margins.
• Ryland Group, Inc (NYSE: RYL) was upgraded to Neutral from Underperform at Credit Suisse.
• Unterberg upgraded shares of Volterra Semiconductor (NASDAQ: VLTR) to Market Perform from Underperform on valuation.

OTHER UPGRADES:

• Friedman Billings upgraded Peabody Energy Corp (NYSE: BTU) to Outperform from Market Perform based on lack of CAPP exposure, growth profile, rising international demand and certain benefits from the scrubber trend.
• JP Morgan upgraded shares of Cincinnati Bell Inc (NYSE: CBB) to Overweight from Neutral, as the firm believes higher capex is reflected in the valuation and FCF should recover in 2008.
• Sandler upgraded First Charter Corp (NASDAQ: FCTR) to Buy from Hold based on valuation.
• Brean Murray has increased confidence in the success of Isle of Capri Casinos' (NASDAQ: ISLE) Isle casino, soon to open at Pompapno Park, and the considerable option value that should be embedded in shares related to a Florida gaming bill which would loosen restrictions on gaming at pari-mutual facilities. The firm upgraded shares to Buy from Hold on the news.
• Deutsche Bank upgraded shares of Pogo Producing Co (NYSE: PPP) to Hold from Sell to reflect the likelihood of corporate action over the near term, most likely the sale of the company in whole or in parts.
• Merill Lynch upgraded Janus Capital Group Inc (NYSE: JNS) and Calamos Asset Management, Inc (NASDAQ: CLMS) to Buy from Neutral.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Yesterday was definitely a tough day for home builders following disappointing news on new homes sales in February. The tone for home builders is going to be rough again today following this morning's earnings release from Lennar Corp. (NYSE: LEN).

It really comes as no surprise that the nation's third largest home builder put up weaker than expected earnings this morning. The subprime mortgage crisis that the market has been struggling with the last month definitely took its toll on the company and according to LEN, the trouble is not nearing an end just yet.

Lennar hit the housing market with a one-two punch today by not only missing analysts' estimates but also forecasting lower 2007 earnings. Analysts had expected to see the company report $0.55 per share for its fiscal first quarter. The home builder came in well shy of that estimate at $0.43 per share with a quarterly profit that fell over 70%. Revenue saw a 14% drop to $2.8 billion and the company saw a decline 27% draw in new homes orders.

MAJOR PAPERS:

• The Wall Street Journal (subscription required) speculated that Carl Icahn's bid for WCI Communities Inc (NYSE: WCI) may be the start of home-builder buyouts. Other possible LBO targets, according to some Wall Street firms, include Toll Brothers Inc (NYSE: TOL), Ryland Group Inc (NYSE: RYL), Beazer Homes USA Inc (NYSE: BZH) and KB Home (NYSE: KBH).
• The Wall Street Journal also reported that Goldman Sachs Group Inc (NYSE: GS) is looking to push deeper into the subprime lending business at a time when the subprime mortgage market is suffering a "meltdown."
• The Financial Times (subscription required) reported that Cerberus Capital Management, one of the leaders in the bid to buy DaimlerChrysler AG's (NYSE: DCX) Chrysler unit, has signed Wolfgang Bernhard to an advisory contract. Bernhard helped restructure Chrysler five years ago.

OTHER PAPERS:

• The U.K. Times reported that a CVC-led private equity group is planning to bid above GBP9.5B for Sainsbury's plc ADR (OTC: JSAIY).
• The U.K. Times also reported that Cadbury Schweppes ADS (NYSE: CSG) is considering spinning off and selling its profitable drinks business, which includes Dr. Pepper and 7-Up, as a way to defend against a takeover bid for the entire group.

Ben Berkowitz is the business news editor at AOL. His weekly column highlights business stories with significant implications that were overlooked at first glance.

The story you didn't read this week but should have is that Bill Gates is heading for the exit on housing and energy stocks. When the world's richest man, who certainly has money to burn, says "nah, no thanks" to an entire sector, pay heed.

Gates sold out of a laundry list of stocks: KB Home (NYSE:KBH), Centex Crop. (NYSE:CTX), Pulte Homes, Inc. (NYSE:PHM), Lennar Corp. (NYSE:LEN), Beazer Homes USA, Inc. (NYSE:BZH), Ryland Group Inc. (NYSE:RYL) and WCI Communities, Inc. (NYSE:WCI) in the housing space; and AES Corp. (NYSE:AES), Chevron Corp. (NYSE:CVX), Consolidated Edison, Inc. (NYSE:ED), Dominion Resources, Inc. (NYSE:D), Duke Energy Corp. (NYSE:DUK), FPL Group, Inc. (NYSE:FPL) and Ameren Corp. (NYSE:AEE) in energy and utilities.

His move in housing was particularly striking - a November filing by his foundation showed new positions in a number of home builders, only to then sell the shares by Dec. 31.

Could it be that the housing market is just so lousy that Gates does not feel compelled to bother? This is a man who is so rich that, if he sold off everything he owned, he could give every man, woman and child in the United States something like $160 and still have plenty of money left over for the Egg McMuffins he was once known to favor.