Wow, this is the second productive day out of last three trading days. Believe it or not, we haven't had this kind of action since mid September. And no no no, we are far from out of the woods as Ocober will be a record setting month as far as redemptions go (Mutual fund industry). However, as we have pointed out since last Thursday, some sectors, especially the commodity groups have given us plenty of opportunities to make up some gains during the last couple of days.
As far as earnings front, many key reports are showing signs of an early recession. This shouldn't come as a surprise to anyone because this is largely expected. But, what we are witnessing right now is what we said we wanted to monitor last week, we are seeing some stocks rebounding despite a not so optimistic report/guidance. The only conclusion drawn from this is that the stock price of many companies have already priced in the current and perhaps foreseeable economic condition. Of course, we can always argue that the economy can get much much worse and we can head toward one of the worst economic periods ever in the history of this market's existence. Sure, anything is possible six months and a year out! For now, we'll have to focus what's coming up and that means two to three months down the road. This is essentially what many, if not most of the companies are capable of forecasting these days. Frankly, nobody knows or can give a reasonable count of what will happen far into 2009. Nowadays, with the market capable of going up or down 10% in a week's time, things will be adjusted quickly if needed.
These commods eh? Boy you gotta either hate them with a passion or love them with your soul! Looking at some of the movers such as, randomly CLF HK CRK PCX MOS CMP CNQ.... within the past few days, you wonder if you have been doing all of the right moves. Nonetheless, if you simply did some homework late last week and bought a few things off our list, either small or big, off dips or even chase some strength, you'd have had good reason to go out for a little celebration, finally. Given the recent circumstances, this is a confidence booster. We haven't alerted many stocks recently, but considering the market has stunk the joint out by 20%, it isn't a bad thing as it keeps you out of trouble and preserves cash for days like the past few. Today, we felt the commods' may lead the SPX (broad market) to trace the FTSE move, this is exactly what happened as we played catch up and moved nearly 30pts on the SPX from alert. Basically, when a lot of plays on your screen head higher near the close, you either lock up some profit or carry some overnight. We did both, so we don't feel like we miss either side the next day. If we get a pop in the morning (if morning earnings reports don't stink), we'd be more inclined to let go more stuff into the strength.
See, whenever this market stabilizes somewhat, we can always find opportunities to trade. Sure, it's unrealistic to expect everything to be calm from now on. In fact, we'd expect more volatility down the road. We can handle volatility, but not irrational behaviour. As long as the market participants show us that they are acting in a logical manner, there's no reason that we can't take advantage of any market movement.