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.