The market went through some huge, swinging actions today. The market opened up in the morning. Nasdaq was quickly up +40 points and the Dow was up +180 points. Then, things turned. Nasdaq was down almost 30 points at its low and the Dow was down 150 points. Gold, then, rushed up above $900/ounce. VIX jumped above 42!!
Just when stocks were going lower and lower, news came out that the government is working on a plan to create an agency that would soak up the bad loans and mortgages. The talks of a possible "RTC (Resolution Trust Corp.)-style" solution quickly spread on the Street. The reaction was immediately positive.
The stock market quickly shot up. Many stocks went through some "extreme" trading actions! STT was a stock of $65/share yesterday. It opened at $66.08 and went as low as $29, down 55%! Then, it popped up to close at $59; that's up +100% from today's low!! LM went down in the morning to $26.56, or down 25% from yesterday's close of $35.49; it came back to close at $37, up +4.25% for the day!
Financials ended mostly higher, with XLF adding +7.87% to close just above $20. STI jumped +15.58%; PRU added +13.56%; BAC gained +12.43%; MA advanced +6.39%. Some big "point-movers" were CME up $38.32; GOOG up $24.59; BIDU up $50.79!
There were some very interesting comments made in our Trade Room today about market's rally:
bluetick News driven absolutely ; but as i pointed out this morning it did happen too last year for the
opex Friday; if a plan like this has been in discussion for some time why wait till today
if not for the greatest impact..and Europe has still to react to it tom., this could create a
feedback
vinaydh my analysis just tells me that if the market would rally this week or not. Or to say if it would just die. I knew that the market had to rally latest by Thursady so when we were red most of the day, I thought my analysis was wrong.
But I have no way of knowing how low the market would go before we rally. Otherwise I would have waited at the bottom to jump in to the calls. If I had such a fool proof system, I would have traded just the week of expiration and be on cruise rest of the month. LOL!
My experience tells me that news always has a way of coming in at the right time to let the market do what it wants to do.
To me, these are perhaps comments that only traders can relate. It is very amazing how "timely" events and news can happen. This morning, I cashed out on one of my personal trades and made a comment in the Trade Room:
HappyTrading FSLR
OCT 230 calls (unpublished) in at $8.5, out at $15, just now; will look for new entries, if the market holds up...
Here's today's intraday chart on FSLR:
As you can see, immediately after I took the profits (+87.5%), FSLR started to go down, and, went down to almost $206 from $222! That's $16 on the stock! Why did I decide to take the profits? It wasn't that I thought FSLR was overbought. It was more where the overall market was:
HappyTrading VIX
sitting right on top of the 30 15-minute MA; could turn up and start a new bullish phase. Be careful. needs to be under 34 to turn these MAs down.
Subsequently, VIX ran from 34.5 all the way to above 42, and, the market slumped to its day low! I think we all have our ways of analyzing the market and different people use different tools. But, I can certainly relate to what bluetick and vinaydh are saying, that sometimes news and events just come out at the right time. How do we know what the right time is? A lot of times, the signals are shown in the charts. For example, the market did not really rally today until VIX reached above 40 and showed a top on the 15-minute chart.
The Dow closed up +410.03 points; SPX gained +50.12 points; Nasdaq jumped +100.25 points:
Techs were strong today, with SOX (semiconductors) and INX2 (internet) leading the way, gaining +5.01% and +4.52%, respectively. XME (metals and mining) added +5.81%. XLE (energy) bounced +2.99%. Both XLF (financials) and HGX (housing) advanced more than +7%. PBW (clean energy) advanced +8.28%. FXI (Chinese ADRs) hopped +13.6%!
SPX
SPX gained +50.12 points to close at 1206.51, above the 1200 level. The MACD flattened.
Nasdaq
Nasdaq jumped +100.25 points to close at 2199.1, just below the 2200 level. The MACD flattened.
Now, the market is looking a little better. Nasdaq has created the initial higher-high and higher-low; SPX closed above that 1200 level. We'll have to see what exactly the speculated government solution is when it is finally, formally, announced. One thing that bothers me though is that the VIX is now showing a possible bottom on its 15-minute chart. However, on the daily chart, it does look like VIX has reached a top today, going above 40. Tomorrow is also options expiration day. So, we'll likely see more wild moves on the market.
Good night and HappyTrading! ™
