Wang’s Happy Trading

What a wild day! The market was down “HUGE”, with the Nasdaq down almost 90 points at one point (AAPL was down almost $30, trading at $126; and GOOG was down over $65, trading under $520.)! This weekend, in my weekly Market Forecast, I said,

“For the new week, the market could look to start drawing a bottom. If SPX 1320 and Nasdaq 2350 don’t hold, we might be looking at SPX 1250 and Nasdaq 2200 for support, which won’t be pretty, to say the least!”

Well, during the day, it was downright ugly!! Nasdaq came close to 2200 and SPX was at 1270. Then, buyers came in, partially encouraged by the rate cute yesterday, and partially perhaps because of the news of “bail out” plans in the making for mortgage insurers.

On the member board, yesterday, I said,
HappyTrading
Posted January 22, 2008 at 11:01 am | Permalink (Edit)
market
does not go straight up even when it’s bouncing; all the intraday MAs have become resistances and will need time to turn. The economic problems don’t go away overnight; the financials legs need time to heal one by one; with a .75 interest rate cut, it is the first step. Now, we’ll need to wait for the effect to kick in.

Also, psychologically, it is hard to turn mentally after this sharp drop. But, I find that when the external forces happen and people still are skeptical, maybe it is time to look for a bottom.

HappyTrading
Posted January 22, 2008 at 12:21 pm | Permalink (Edit)
market
I’m cautiously “more” optimistic. If this is indeed establishing the bottom, then, we haven’t seen the real bounce yet. The initial bounce will need to take SPX to 1375-1410 (the 2 resistance levels above 1320). Then, we’d probably need a test of some sort before calling the bounce “real”.

I have been saying for the past 2 weeks that we need to get some external stimuli to change the market sentiment. Then, we need to be patient and allow the market to establish a bottom and turn up.

The Dow closed up nearly +300 points; SPX gained +28.10 points; Nasdaq added +24.14 points.

Here’s how the market looked at the close:

Techs were still weaker, with BTK (biotechs) down 2.06%. XLF (financials) jumped +7.1% and HGX (housing) flew up +9.55%. OIH came back up to $160, up +1.41%. SOX (semiconductors) added +1.23%. FXI rebounded +5.28%.

SPX

SPX added 28.1 points to close at 1338.60. It closed above 1320, very encouraging. Like I mentioned on the member board (see above), I’d like to see this initial bounce to get at least above the 1375 level.

Nasdaq

Nasdaq gained +24.14 points to close at 2316.41. It came all the way back from a 90-point deficit; that’s a bounce of more than 100 points! We’d still need to see it above 2350 to establish a bottom.

The financial sector really benefitted from today’s bounce. Percentage-wise, MBIA and ABK were among the top gainers, adding +32.56% and +71.89%, respectively. WYNN was upgraded to a “BUY” today. Its shares traded as high as $112.5 and closed at $109.96, up $8.75, or +8.65%. We took advantage of the upgrade as the market gained upwards momentum in the afternoon, and traded the Feb 110 calls (UWYBB) with a +60% profit in 1 hour. After the market, COF reported earnings that met the expectations. Its shares traded up +4.07 in AH, on top of the +11% gain from the regular session. QCOM announced a strong 1Q that jumped +18% in profit. Its shares traded up nearly +7% in AH trading!

Good night and HappyTrading! ™