Your Personal Trader - DJIM Journal '08

The Calvary consisting of Treasury, Fed, FDIC has been coming in shooting bullet after bullet, finally today the arsenal finally hit in one 936 point historic strike.   Of course, it couldn’t have happened without its allies across the pond getting it all started with their plan.   The biggest bullet is the anticipation of the one to be announced tomorrow, this was the late afternoon rush higher with the prospect of US government buying preferred equity stakes to get at the credit crisis. This should unfreeze the big freeze going on now in the credit markets. Actually, it better..it must!

A tremendous bounce off a probable climatic Friday continued, unfortunately this gigantic move today has come with government intervention tomorrow, we all know to well these interventions have led to sell- offs. Run today, sell -off tomorrow is a high possibility now considering the magnitude of the move into the news.   Bottom or no bottom, today’s 20% ++ moves were too fast, no matter how beat up stocks have been…. 20%-30 is really not that much considering stocks are down 50-100% in months, if not in a few weeks. It was early October that big caps were falling 20% in days..CAT AA, not to mention last weeks beatings.

Today is possibly once again another opportunity for shorts to line up earlier than they had possibly ever dreamed of. So, is confidence restored all of a sudden?. Hardly, that’s why it is just a relief rally until proven otherwise.   Bond markets closure today also had an effect to allow stocks to run wild, a lower USD and higher Oil possibility noted heading into today’s trading day also played a vital role in the fever, especially in the commodity stocks.   As pointed out Friday morning, we always favour high beta stocks in any rally and those were some of the greatest point gainers today….BIDU, GOOG FSLR MA etc.   The only group we liked last week was the AG-Chem trade and those fared well again and are the only group near their highs from last week…MOS POT MON CMP CF.

We have not seen any change in the steel, coal picture worldwide to get back on the wagon.

What we need to see now,

Improved liquidity, watch for the spreads, LIBOR etc starting with the Bond Markets re-opening. We’re are not going anywhere fast if this bank intervention does not solve the problems. It should, but it doesn’t mean the market will keep on flying tomorrow.

Leadership emerge, today everything was up and you can’t decipher if and what may lead. There has to be leadership for a market to move higher. We all should be looking in this direction as this where you’ll want to park some money.

Earnings, as noted last week this is a crucial tale as it focuses on the economy worldwide. We need to see stocks react favourably one way or another. Considering stocks are so beat up, some undervalued it will be interesting to see how they react to their reports. A stock may not need to ‘ blow out’ a report to move higher, we’ll watch for stocks to move higher on just average reports to see if a trend is forming where earnings reports are cooked in. In this economy, we’re not anticipating blow outs to move stocks as in the past few years.