WED. OCT. 29- RIP Bear Market

Hopefully, none of the Richard Rizzos were surprised by the rally yesterday. As discussed in detail the last two days, the tone of the market distinctly changed on Friday when the markets failed to react to the panic overseas after opening limit down on the futures. Then, while there was a collapse at the close yesterday, there was a relative dearth of selling pressure. Well, with Asia rallying and the Fed’s money being put to work, that was enough of an impetus to get things going and as sellers continued to step to the side, there was a stampede higher yesterday afternoon. Harking back to the embryonic stages of the rally were sharp gains throughout the world. Following the gains in Hong Kong in particular, there was a rather bizarre action in Germany as there was a massive short squeeze in Volkswagen- which for a time became the entity with the highest market capitalization on the planet. Now, that is a short squeeze! The rabid short covering of some hedge funds over there further helped to create the frenzy here. This is why we issued an A-B-A2 rally forecast yesterday morning following a sharp sell-off. Mind you, we would not go so far as to say we called the bottom based on the comments in Monday’s blog, but were certainly ready for that rally yesterday- particularly as day traders throughout Wall Street kept trying to short the market on the way up. So, what happens now? First, operate/trade under the assumption that a bottom has been reached. It does not mean we’re off to the races per se, but the environment is completely different now. In the immediate-term, expect very choppy action with prices continuing to swing wildly, but with more of an upside bias. Namely, do not keep looking for massive sell-offs; rather, start looking for a more cohesive rally with the declines increasingly shallow as investors buy into the government plan.

Prices in Asia and Europe continued to rebound overnight with markets sharply higher worldwide. Today will be very choppy; the Fed has their meeting at 2:15PM. While a 50 basis point cut is widely expected, most entities do not know how to position themselves properly with any certainty. The most likely scenario is that the rally continues initially with some profit taking thereafter. That said, there does seem to be a bid so do not look for gigantic gyrations of either side of unchanged for the major indeces at least until 2:15PM when a likely A-B-A2 develops based on where the market is at that time.

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 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified


Good-

APOL- good earnings

BMRN- good earnings

CMP- good earnings

FLS- good earnings

MS- total reversal yesterday; if it opens lower, looking to buy thru unch and/or an A-B-A2 to the downside if it opens negative and the market is weak

DIN- stunning gains last two days after they were able to sell a number of franchises to raise capital; the stock will likely go with the market

TGT- strong gains following news that Ackman wants to try to enhance value of company; could be more gains today if market OK

STI, JPM, BAC, USB, WFC- among the strongest banks yesterday; will likely lead market today one way or another

VNO, SPG- among the REIT’s that were very strong yesterday

AMGN, CELG- among biotechs which were very strong

AAPL, BEBE, AVAV – on “Mad Money” last night

HES, XOM- among the many oil stocks that had panic short covering

EVC- massive short squeeze

NXY- terrific earnings

Bad-

BEC- missed earnings

DRIV- missed and warned yet stock didn’t break down last night…if it opens down and the market rallies, look to buy thru unch

MOLX- missed and warned earnings

VPRT- atrocious earnings

FISV- bad earnings

LVS, WYNN- among other casinos, managed to finish down yesterday. A massive immediate-term move will likely occur; either both of these entities will explode on short covering or LVS in particular may not make it. Certainly a sector to watch

KNDL- closed on its low after PRXL had terrible earnings

ECOL- closed on a low after announced a government contract was delayed as the U.S. Army Corps of Engineers announced a lack of funding for the fiscal year

GLW- bad earnings

SEE- missed and warned

Earnings list:

WED OCT 29 BEF

AET AG ANR

BPO BRY BWA

CAH CETV CINF

CMCSA GLW GRMN

HAR HERO HES

IMA JNY KFT

LAZ LM MCO

MDP MGM MWV

NBL NEM NXY

NYB OC ODP

PG PX Q

SEE SLAB SPR

SPW SU SVVS

TWI VPHM WEC

WPI




WED OCT 29 AFT

AAP AEM AMP

AW BGC BMR

CA CBT CGNX

CLF CME COG

CW CYH DPL

DTE DVR EQR

FR FRT FSLR

GVA HBI HIG

HIW HLX HRS

ITRI JDSU MET

MUR MXIM OI

OIS ORLY PRU

ROG STR SYMC

TRN TSO V

VCLK WLL







Good luck today.



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