THURS. OCT. 9 - The Ever-Changing Market

Yesterday morning, Citicorp announced it was almost finally out of the mortgage business. On Tuesday, a commercial for Interactive Brokers came on which appealed not to making money for the average investor, but to the fact that one’s deposits at the firm are safe if one actually wants to trade. Then, also yesterday, Monsanto (MON) issued poor guidance; the stock opened down 6 to 68, but traded up to nearly 88, a gain of 29% or so! Now, we are not going to write a whole synopsis as to whether a bottom is in for the market (which it may well be). Nor are we going to go into the technical market parameters which signal a bottom (heavy volume, breath, reversal, et al). Nor are we going to prognosticate whether this is even a short-term halt to the decline. But, what is VERY important here is that anything from a tone change to a mere two-sided war is now in effect. With the signs that were shown yesterday combined with the market action, it indicates that a few entities are willing to step in and play from the long side – even if they got vaporized in the late afternoon on the close. For day traders, this changes the game entirely in the immediate-term. Just because we are able to push the short button on financials today does not mean it’ll make it easier to trade. Be aware of all the signs around you and certainly be aware that the market is very suggestive to violent moves on both sides of the market for the next spate of time as opposed to just the downside.

Overnight, there was finally a bit of a bounce on the heels of IBM pre-announcing in-line earnings. Tokyo was down slightly again, but Hong Kong bounced 3% with the bounce extending to Europe as the bourses are up 2%-3% across the board. Off-hand, the rebound will likely extend to Wall Street. There are still immeasurable worries abounding so there likely will be another sell-off at some point, but if the early strength holds, we’ll probably have a mild short covering rally on much thinner volume than yesterday. However, if by mid-day the rally fails to hold, watch out in the afternoon.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


Good-

MET-share offering at 26.50...if it traes down pre-open, buy thru unch...liekly an A-B-A2 to upside

IBM- pre-announced earnings will be good this coming quarter

MOS/POT/MON- strong all day yesterday; in a short covering rally, looking to buy these if they open lower


SII, HES, NOV, RIG – all strong yesterday; will likely follow oil prices…if however, the two diverge with oil higher and the stocks open higher but go down a bit, short all thru unch

PCLN- closed strong; may rally with IBM

Bad-

RT- poor earnings

MW- warned on earnings

AIV- weakest of the REIT’s all day yesterday; may be a short thru 23

FR- another weak REIT; looking to short thru 16.30

LNY- after failed takeover, rumors abound now over the firm’s very survival; looking to short thru 9

WFSL- regional bank; closed on its low

ASCA- this particular casino stock continues weak

ADVNB- small insurer which closed on its low

PTP, JEF, ALL, ACE, HIG- insurers and mid-tier financials had broad-based selling in last hour yesterday

EMN- notably weak yesterday

IVZ- continues to break down

SHO- tiny hotelier having problems

KEY- among bigger banks which closed weak yesterday

L- had horrible day yesterday

Earnings-

THURS OCT 9 BEF

RPM .57/1.00B .45/966M 1.86/3.86B 2.05/4.09B

THURS OCT 9 AFT

CVX 3.39/92.03B 3.06/96.81B 11.95/308.49B 12.24/297.95B

RBN .70/230M .51/188M 2.35/789M 2.52/846M

TSS .34/490M .35/499M 1.32/1.93B 1.45/2.05B


Good luck today.

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