Wang’s Happy Trading

Being pressured by a sell-off in the global financial markets, the Fed finally slashed interest rates by 75 Bps today. This certainly helped the market to minimize the loss today. The market futures were way down this weekend. Even with the rate cut being announced in pre-market hours, the market gapped down and quickly reached the day low within the first half-hour. The Dow was down almost 465 points in the morning, but, closed down 128.11 points; SPX ended lower by 14.69 points; and the Nasdaq fell 47.75 points.

Here’s how the market looked at the close:

VIX jumped +14.09% and reached 37.57 this morning. XLF (financials) and HGX (housing) liked hearing the lower interest rates, gaining +2.16% and +3%, respectively. GLD (gold) and GDX (gold miners) also found buyers coming back. GDX, in particular, added +2.4%. Rest of the market did not seem to be able to shift gears that quickly and stuck in the red. INX2 (Internet), SOX (semiconductors), BTK (biotechs), and SWH (software) were all down substantially. FXI (Chinese ADRs) tumbled 8.4%. PBW (clean energy) is becoming oversold, but, still lost 1.18%.

SPX

SPX closed down 14.69 points, at 1310.50. Coming back from below 1280 to close down 1.11% is encouraging. To establish a bottom, SPX needs to be firmly above the 1320 level.

Nasdaq

Nasdaq fell 47.75 points to close at 2292.27. It bounced back from almost touching 2220! To establish a bottom, Nasdaq needs to go back above 2350.

This weekend, I said, “… unless there are external forces to change the market sentiment, buyers are unlikely to commit. On the other hand, when the bottom falls out and the capitulation happens, the market may finally be able to stabilize.” I also said, “I also think that the Fed should step in right now and act decisively.”

Well, the Fed finally did step in with a decisive 75 Bps cut. Now what? The market sentiment seems to still range from bewilderment to skeptism. I think there are no doubt more economic adjustments needed to be made. But, most economic problems don’t get solved overnight. The rate cut is a first significant step, and, we’ll need to allow time for the effect to kick in.

This morning, PCP announced a 3Q profit that jumped +55%. However, its shares were down 7.84%. SHLD shares traded as high as $106.78 on company reconstruction announcements. SHLD closed at $99.85, up $10.42, or +11.65%. After the market, AAPL reported solid earnings, but, “spooked” the investors with its forward outlook. Its shares fell more than 11% in AH trading. TXN announced a +13% rise in its 4Q profit, sending its shares up +4.18% after the market.

Good night and HappyTrading! ™