Today on the Marketbeat: The Rally at the end of the tunnel

Numbers @ Close:

DOW: +200 to 11,022

S&P: +24 to 1,209

NASDAQ: +30 to 2,186

RUS2K: +8 to 705

TSX/S&P: +33 to 12,546

VIX: -2.45 

Internals:

NYSE

BREATH: 2.5/1 Positive

TRIN: -

A/D: +1380

NASDAQ

BREATH: 3/1 Positive

TRIN: .45

A/D: +560

Core Sector: 15/1 Bulls - builders, oil, insurance, software, retail/ downside gold

ES chart (Click to enlarge):

Today's price action was one of the first real glimpses of hope for the return to a slightly less chaotic state. The day began with a solid gap up, which didn't come close to filling (so keep today in the back of your minds in case we retest lows, because that gap will fill fast). The opening price action cleared the 200ma on the ES and YM which is a positive sign seeing how we held it through the day into the close. After that, the market just used the pivot points for guidance climbing up throughout the day. Volume was up 10% in the early session hours, and up slightly in the afternoon, giving some steam behind the rally. Reasons for the rally are coming off the news that the powers that be have come to a agreement on the principals of the bailout package, however, the ink is not dry yet. This plan proposes a 250 billion dollar immediate package wit the remaining 450 billion to come in payment packages. But like most things in life, this package will not come free, early estimates say each US tax payer will be shelling out $2300 per person, so much for those stimulus checks. 

Internals Chart (Click to enlarge):

Under the hood the internals rode the rally in a clear fashion, with the core sector list coming in strong at 15/1 for the bulls, with Builders, oil, insurance, software and retail among the leaders and Gold sitting as the sole loser on the day. The Breathes came in strong at 2.5 and 3 to 1 Positive for the NYSE and NASDAQ respectively. While the NYSE AD line blew up +1380 ticks, while the NASDAQ tacked on a solid +560 ticks. 

Chart of GLD (Click to enlarge):

Although Gold was the only sector in the red today, the price action on the ETF GOLD alongside the immense buying of the Dec 94 calls today is bringing my idea from yesterday together more and more. Today GLD broke though the 23/6% mark, but closed the day 2 cents over it, and put in one nice bottoming tail, watch for a break of around $88 with a stop around $86. 

Unusual Options Activity:

YHOO / ATI / JAS / GLD / CI / BX

Stocks added to no-shorting list (added Wednesday, sept 24th):

IBM / HRB / MHS / ABR / DDR / ASI / LFG / BAP / LXP

 

Food 4 Thought:

Yesterday I covered the 20 Do's of Day Trading, by Jeff Bierman. Today I'm going to finish up that lesson with the 20 Dont's of Day Trading. 

DONT'S

 

• 1) Don't get emotional--the market is benign to your feelings
  
• 2) Don't over-leverage into bad trades--reduce your risk, not increase your risk
  
• 3) Don't get in all at once in a trade--build your position piece by piece
  
• 4) Don't get greedy--fade the trade and book profits systematically
  
• 5) Don't trade purely on technicals--fundamentals matter!!
  
• 6) Don't stuff your plate--trade a manageable number of stocks at one time
  
• 7) Don't trade solely on candlesticks---make sure you have a technical study set applied
  
• 8) Don't catch "falling knives" or short "rocket ships"--wait until the trend is exhausted
  
• 9) Don't force yourself to trade--trade when the opportunity is right, not because you have to
  
• 10) Don't trade like a compulsive gambler--trade under control
  
• 11) Don't get caught up in the media noise/market hype--"those who know don't tell; those who tell don't know"
  
• 12) Don't trade on stock tips--be circumspect of other motives
  
• 13) Don't gloat over or brag about your last trade--focus on your next trade
  
• 14) Don't feel as if you have to get all your money back at one time if you sustain losses--take it one day at a time
  
• 15) Don't get discouraged--even the professionals get burned
  
• 16) Don't give up a gain when you have it--it's OK to make a bad trade, but inexcusable to give up a gain
  
• 17) Don't get cocky--the market is bigger than all of us and can reverse your fortune at any time
  
• 18) Don't think this is a way to generate "easy" income--if it were so easy, no one would ever work another job
  
• 19) Don't take your trading home with you--divorce yourself from the market because it's not your whole life
  
• 20) Don't put all your eggs into one basket--stay diversified with your financial wherewithal 

 

Jeffrey Bierman

Anyone who wishes to get the email that Jeff sent me, drop me a line at DaizonEnd@gmail.com and ill get that to you asap....

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