Oct 16 - Afternoon update

The market has settled some since dropping over 300 pts after the first hour of trading this morning, with the Dow currently trading down only .5%. Continental Airlines reported tremendous 3Q results, and is currently trading up 14%, carrying the rest of the Airline sector with it (trading on average up 13% as crude continues to drop). VIX has settled a bit, currently trading up 10%, down from its earlier gains of 18%. Sector stength currently showing in Energy, Pharma, and Tech. GOOG earnings will be highly anticpated after close today.

The First Hour

VIX is trading at 79.........enough said

World Series bound

Apologies to any readers I have out there for my absence. My world series bound phillies took precedence over any reporting on the markets yesterday.

I will keep the morning report brief. Positive jobless report is outweighing the negative 3Q reports from Citigroup and Merrill at the moment, and the Dow is trading up about 50 points.

Crude is trading down another 2%, as recessionary pressures continue to weigh in. Despite this, energy and oil stocks are trading mostly higher in the first hour. Tech is also joining in on the early rally. I still see a 2% drop for the Dow at close today.

Oct 15 - Afternoon Update

Bernanke has just finished speaking, and the message was clearly not a good one. To sum it up in a few words, he's said that economic recovery cannot begin until the markets return to a normal state. It doesn't take a brilliant person to understand the high level of uncertainty and caution in this statement, and the markets are certainly proving that, as the Dow is now trading down over 5%. Whether Wall St. can digest this reality and move on will be the primary focus as we move towards the close. With the disappointing retail numbers still fresh in investors' minds and with the VIX trading up over 13% as of 2pm, it is unlikely we will see the Dow recover much, if any, of these losses today. The situation today is another clear reminder that we are still very much in a bear market, and that Monday was one of your typical large one-day rebounds that are often seen a bear market such as this.

Oct 15 - The First Hour

My fears from this morning have materialized, as the Dow is trading down over 3.5% at the moment. Coca Cola and Wells have remained strong after their positive 3Q numbers announced prior to the open, but aside from that, we are seeing red across all sectors today as Retail numbers are indeed dragging the markets down. Crude has continued its fall, down 5% now, and another unfortunate number to focus on is the 9.5% surge in VIX since the open. This is a clear sign that investors are coming back down to earth, and realizing that there is much work ahead for the next President to dig us out of this recession.

The only bright spot at the moment is the Airline sector, which is clearly benefitting from yet another recessionary drop in crude prices. United Airlines (UAUA) is leading the way in that sector with gains of 5.5%. Delta (DAL) announces 3Q numbers before the close today, so keep your ears open for their results as a further surge for the sector could come about if results are positive.

EBAY also announces 3Q results before close today, and as it stands now, investors are quite bullish on estimates, as call buyers are outnumbering put buyers 1.7 to 1 right now. If results are in fact positive, this could erase some of the fear from this morning's Retail numbers, and allow the Dow to erase some of its early losses in afternoon trading.

Oct 15 - Pre-Market

Well I was incorrect on a couple of fronts from yesterday's "Closing Report." It's been announced this morning that both Wells and Coca Cola have beaten estimates with their 3Q reports. However, only Coca Cola is trading up this morning, at 5% over yesterday's close. Wells on the other hand is trading slightly down in pre trading. JP Morgan announced negative 3Q results, and is trading down almost 3% in pre.

US Equity market futures are also down, with S&P futures trading down 2.75% and Nasdaq futures trading down 1.75%. Global markets are negative as well up to this point, the Nikkei losing almost 3% after its rally to start the week. Crude futures are trading down 3.5% as global recession fears continue to stay in focus.

As I stated in yesterday's "Closing Report", I expected today's Retail numbers to bring investors back to the reality that is this current bear market, and spin the Dow down a couple percentage points, but it appears that investors are already bracing themselves for disappointment, as futures continue to trend down this morning. Along with this, I also think investors are beginning to realize that the government purchase of bank stocks is a great step in the right direction, but that we are only in the infancy of repairing this mess. Felix Salmon from SeekingAlpha raises an interesting point in this article (http://seekingalpha.com/article/99909-will-the-banks-lend) that banks may still be very fearful to lend despite the capital injection from the Treasury.

We'll see if the bulls can step in to some pre trading and make for a positive open, but I have my doubts, and I'm beginning to fear that Retail numbers and investors' move back to the reality of the mess may drag the Dow down more then the 2.5% I called for yesterday.

On a brighter note, the Phils can clinch tonight!

Oct 14 - Closing report

I was beginning to doubt my pre-market expectations when the Dow had dropped 260 points at 2:45pm. But the strong gains from many of the financials kept me confident, and proved to keep Wall Street confident, as the Dow finished the day off less then 1%.

Despite a lowsy day for tech, INTC beat earnings estimates after market, and is trading up 6% in after hours trading. Genentech (ticker DNA) also reported better then expected 3Q results, and is trading up 4.1% after hours.

Big earnings announcements from JP Morgan, Wells Fargo, and Coca Cola tomorrow before the open. Obviously results from JP and Wells will be negative, but will they beat estimates, and how will Wall Street react to their negative 3Q? I think the reaction will be a positive one for a couple of reasons: 1) Wells recent acquisition of Wachovia was a huge positive not only for the sector, but for the credit markets as a whole, 2) JP has been one of the most fundamentally sound financial institutions since the credit crisis began, and I don't expect this fact to change with Jamie Dimon at the helm. As for Coca Cola, they have traded down every day this month, but a scan of the October option contract volume doesn't favor either side, so they're a tougher call to make, but I see no reason why they would beat estimates, and since I don't like to go against a trend, I'm betting they will drop again tomorrow.

As for Wednesday's market prediction, I think a strong performance from financials today mixed with strong 3Q numbers from INTC (tech) and DNA (pharma) will lead to a positive open. However, I expect weak results from the 10am annoucement of Retail Sales and Empire Manufacturing numbers, and I expect this to drag the market down for the remainder of the day, finishing down 2.5%.

Oct 14 - Afternoon update

As we approach the close, the Dow remains within that 1% range I expected, but unfortunately it's on the down side, as profit-takers emerge and will run up their activity to the close. With the exception of IBM, tech has gone down the drain today, with the Nasdaq trading down over 4%. On the bright side, financials continue to hold their morning gains, with the exception of the early stragglers (USB, JPM, BLK, PNC). The Energy and Oil sectors remain split, although crude has edged lower since this morning, trading down a little over 2% right now. Pharma is the only other major sector trading mostly higher on the day. VIX has stayed steady at +5%, signifying that investor confidence obviously isn't what it was yesterday, and that large gains after a weekend can often be overextended. Remember too that we are in a bear market, and large one-day gains like yesterday are not uncommon.

In the news, the new line of Macbooks was introduced today, sporting a metal body and multi-touch trackpad; despite this, AAPL is trading down 5%, being drug down by the rest of the sector. Acclaimed economist Nouriel Roubini is still extremely bearish on the markets, and is quoted saying that "we are still in a recession that is the worst we've seen in 40 years." Global markets, however, remain positive, with Russia futures up 17% and Nikkei futures up 3.75%.

If the Dow continues its downward slide and falls deeply outside of my 1% range, I think this will point to a larger fear of bad 3Q earnings then I originally anticipated. That remains to be seen.

See you at the close.

Oct 14 - The First Hour

The retracement in the markets has happened more quickly then I anticipated, with Techs leading the downward turn. Here are the numbers so far:

Dow -.7%
S&P -.8%
Nasdaq -3%

VIX +3%
Crude -.9%
USD -.7%

Financials for the most part are holding onto this mornings gains, although JPM, BLK, USB, and PNC have all turned negative, with losses ranging from 3 - 8%.

Ag stocks (POT, MON) have also gone negative into the late morning. Trading in the Energy and Oil sectors is split, as crude, although slightly negative, appears to be heading for a flat day.

JNJ is holding onto most if its gains after better then expected 3Q results. This news is boosting most of the Pharma sector as well.

Oct 14 - Pre-Market

S&P futures are roaring in pre-open trading this morning, up nearly 4% after George Bush spoke live and gave further support of the government's latest strategy to inject $250 billion of capital directly into banks by buying up shares of their stock. This is widely considered the most reasonable plan to date because the government will be buying up shares at fair market value, unlike the bad paper they had initially planned to purchase and remove off of the banks' balance sheets.

In my infancy of day-trading, I have quickly learned that pre-open trading certainly carries no guarantees for how the market will open and trade for the day, but a 4% gain pre-open is certainly something to raise you out of your seat for the time being.

In other news, Johnson&Johnson (ticker JNJ) beat earnings as I expected, and they are trading up $3 at nearly $66 a share pre-open. Also, JP Morgan (ticker JPM) is trading up over $2 a share at $44.25 this morning pre-open, which eases my concerns from yesterday when they, along with MTB and USB, were trading against the positive surge. The rest of the financial sector is following suit, with Goldman Sachs (ticker GS) leading the way with pre-open gains of $16/share. AAPL is seeing nice gains as well, trading up over $5 at $115 a share.

All of this activity is extremely positive going into today's trading, and I believe investors are finally becoming confident that the goverment's oversight of this credit crisis will FINALLY begin to start paying dividends. Remember though.......be extremely cautious in how you read pre-open trading, as it can often times be very overextended in either direction. That being said, I still believe we will see the Dow retrace some of its gains from yesterday, but nothing outside of 1%.

And before the opening bell rings, I must ask for a long round of applause for my Phillies, who pulled out an improbable win last night to go up 3 - 1 in the NLCS. We can thank Joe Torre's pathetic bullpen management for that one. One more game..........lets go Phils!

History rewritten once again.......

Historical closes for the Dow seem all too regular now, or at least for the last two weeks of trading anyway. Thankfully, today's was the first positive record-breaking session in the last 14 of them. I will refer to my "Rally Continues" post, and admit that I certainly didn't accurately grasp the level of investor confidence that remained in the markets all the way through the close, the Dow, S&P, and Nasdaq all finishing up 12%. The news that led this incredible surge was both the new plan for goverment to begin buying shares of bank stock (following in Gordon Brown's footsteps), as well as the capital injection for Morgan Stanley, which led to an 86% advance for that stock. SPX volume for the day was 58.5 million shares traded compared to 95 million shares last Friday 10/10. A move like today's without the trading volume behind it indicates to me that it was a bit inflated. Another positive, however, was the VIX finishing down 21% on the day, which is twice the amount of any move last week when the markets were crushed.

So the obvious question now is: What could tomorrow possibly bring?

I definitely see a retracement, although I think it will be minor. S&P futures are down slightly in post-market trading. The barage of 3Q earnings begins, but there is much uncertainty in how the markets will react to what should prove to be announcements that are below street estimates for most of the sectors, financials epsecially. Bad 2Q earnings went almost unnoticed, as greater woes such as Lehman simply weighed more heavily on investors' minds. Will the "new" bailout plan mixed with the upcoming presidential election weigh more heavily on investors' minds in a positive way then bad 3Q earnings? I think so. But I don't believe we've hit bottom yet either. I see a short-term bull run for the next 3 weeks until election time.

Today should make any investor feel warm and fuzzy inside, but DO NOT lose sight of the larger picture and just how deep of a hole we are in.

The rally continues.....

Markets continue to charge higher from today's initial gains. The Dow, S&P, and Nasdaq are all up over 7% on the day. All sectors have remained positive, but the financials I spoke of in my "First Hour" post have remained down on the day, leading me to believe that this rally is still a bit inflated. I am expecting some profit taking near the 4pm close, with gains on the Dow and S&P retracing back to around 5.5%. One key piece of data to note is the 14.5% drop in the VIX, which could point to a bottom in the near future if it continues its downward trend. Other fundamental data to to keep in mind includes crude trading up 4.3% and USD trading down 1.5%. If these two continue their respecitve trends, we can discern that investors may be starting to price the fear and capitulation out of the markets. Keep an eye on these through the rest of the week, especially if the markets continue trending upward.
Stocks to watch as we head into the close: MS (up 70% on news of capital injection), AAPL (up over 8% on analyst upgrade), GM (up 31%, but still under heavy scrutiny), JPM (down 3.3%, a dramatic move against today's positive trend).
Final analysis to follow at the close, so please check back.

The First Hour.....

Our markets opened with a boom and are continuing to rally, with the Dow and S&P both up over 5% after the first hour of trading. It was comforting to see that the profit takers did not swarm and erase early gains. There is not a sector to dislike, but the Energy, Oil, and Agriculture sectors are showing the largest moves, as they have been battered more then most over the last two months.
Two stocks that caught my eye at the open were GM and MS, up 30% and 52% respectively. MS is up on news that the capital injection of $9 billion from the Japan-based Mitsubishi Group was finalized, a move that was all but dead at the close on Friday. The Tech sector is living large on news of analyst upgrades for AAPL. The Nasdaq 100 Index is up 5.25% so far.
The only negative I could pick out of morning trading is that the most accurately valued financials (JPM, USB, PNC, MTB) are all down at the moment. This fact could point to an inflated run to the upside for the markets. However, with no major US economic news to be released today and trading volume picking up in so many of the unnecessarily beaten down sectors, I am convinced that investor confidence will remain strong throughout the day and the bulls will finally win won.

Monday morning sun shining bright

Markets across the world are flourishing to start the week:

Nikkei +7.25%
Russia +4.5%
Shanghai +4.2%

And our own S&P futures are up 4.25%. What does this signify?......investors are confident that governments worldwide are finally moving in the right direction to unfreeze credit markets for banks and consumers alike. News on this global crisis will be abundant this week, so keep your ears open. Keep in mind that it is also option expirations week, when institutions will either be exiting or exercising all of their front month positions. Historically, this activity translates to a mostly flat week for the markets especially towards the end, but we all know that a flat, steady week could be exactly what the doctor ordered.

No major earnings annoucements today, but Johnson & Johnson will be reporting during trading hours tomorrow. They are a gem in Pharma with great fundamentals, and if the markets are trading up on bailout news today, I would expect JNJ to trade very nicely after they reveal their 3rd quarter results tomorrow.

Will we finally see the Dow end a day in the black? Well for all my poker fans, I will definitely be staying in today's hand to see the river.

Weekend Update

Another Monday will be upon us with the same question in mind: Where is the now infamous $700 billion going? The latest light bulb in Congress's head will have them directly purchasing stocks in many of the banks that have weathered the storm to this point but are in obvious need of capital. Unlike the initial plan itself, this idea is actually supported by the majority of Congress, with Charles Shumer being the loudest voice.

As I mentioned on Friday, earnings galore are upcoming, with financials peppering this week especially. S&P futures are up 3.5% and Nasdaq futures are up 2.75%. This is not surprising considering the rally from the Dow I noted on Friday. Whether these overnight gains will be sustained throughout trading on Monday remains to be seen (recall the positive opens for the Dow last week were wiped out within the first hour of trading). However, with news on the government purchase of bank stocks presumably dominating headlines tomorrow, I am confident that we will see these gains sustained for most of the day. Another positive going into tomorrow's trading is news that European goverments have agreed to begin backing the loans made between banks in an effort to unhinge the lock on their credit markets.

It looks like my Phils are going to drop game 3, but a trading day in the black tomorrow would certainly ease the pain. Goodnite all.

Oct 10 - Market Summary

Dow -1.5% 8451.19
S&P -1.2% 899.23
NASDAQ -0.4% 1269.80

VIX +9.4% 69.95
Crude -6.8% 80.70
USD +1.9% 82.88

The winners on the day were tech, led emphatically by AAPL up 9% to close at 96.80, and financials, led by an enormous move from Wachovia (+43%) on news that the Wells Fargo deal has surpassed the Antitrust hurdles. Despite the Dow being down for the 8th straight day, this was by far the best day this week. Do no forget the continuing huge swings in volatility, clearly seen today when the Dow was down over 600 pts in earlier trading.

I think we can take the late rally from the Dow as a positive going into this weekend. However, with the VIX at record levels, do not think for a second that we have hit bottom yet. Many of the financials release earnings next week, JPM, C, and WFC being the big guns. Other notable earnings announcements to keep in mind are JNJ, DNA, INTC, NOK, and COF.

As you may or may not have noticed, I am a resident of the great city of Brotherly Love, so lets give it up for my Phillies in Game 2 tonight against Manny and the Dodgers. And as always, happy trading.

The next step

So where is the bottom, and where do we go once we hit it? Questions in everyone's mind, i am sure. After witnessing the most wicked downward spiral of the financial markets in recent memory, I find myself thinking about one thing: how can i capitalize when things turn around? (i think we can all agree that they will).

Lets start with that 401k. Before the day is out, i will be exiting my conservative bond funds, and getting back to my aggressive style, starting with the Vanguard Energy fund. It's expected that when OPEC has its annual holiday meeting (between Thanksgiving and Christmas), they will severly cut oil production to bring oil back to the $100 level, because they are losing billions upon billions as it stands now in this global turmoil.

As for stock plays right now, i like those sectors who have no exposure to this mortgage mess, and are down merely because of what i like to call "general conditions." I would put Tech at the top of this list, and I like AAPL and IBM to begin their run back to greatness. If you're willing to walk into the fire that is Financials, here's my big 5: JPM, BAC, WFC, PNC, BLK. And finally, keep this one fact in the back of your mind: MSFT has a ton of cash on hand, and we all know how they love M&A, and what better time for M&A for a company that has the capital to do it. I think RIMM could enter their radar real soon.

So come November, lets hope we put a good man in office who can right this ship that is America.