GE has already given the markets a nice lift this morning with in-line earnings (up 4%), a revenue beat and 5 of 6 units coming in with raised guidance for Q1. If not for the expected drop in the finance arm, these guys would have beat by a mile!
That's the global economy in a microcasm, most of the economy is strong and expanding and there's a problem in the financial industry but it's not the end of the world. Despite my very depressed take on yesterday's action we ended the day very bullish as most of our poor callers lost pretty much all of their value yesterday. As we expected, the markets are back to MANIC this morning as the bail-out no one seemed to care about yesterday is suddenly going to save us today.
Of course, there is nothing I hate more than sitting around waiting for George Bush to solve all my problems, but we'll take whatever we can get right now, if only to give us a nice boost to sell more calls into next week. Any "solution" that involves tax breaks will be a bad idea. Any solution that randomly injects money into the system, in hopes that it will "trickle down" to the people who actually need it, will also be a bad idea, but the Dems are backed into a corner and will have to approve whatever nonsense the Administration shoves down our throats.
I just did the LTP Review for the members and I was shocked at how few stocks I was able to recommend for a new play. The LTP is our all-star list, they should always be good to buy but I am really worried now. A joke going around the trader floor yesterday was: "I like small caps like INTC, AAPL, DELL and GOOG" and the other guy says "Those are not small caps" and the trader says "Just wait." That's known as gallows humor and it will take more than a sprinkling of tax rebates to actually SOLVE this problem.
Asia finished flat but BOY was it exciting this morning. The Hang Seng gapped down 1,000 points but took it all back in a day of steady gains while the Nikkei fell 400 before what must have been one hell of a lunch break, after which they drove the market up 500 points in 90 minutes!
Europe is flattish ahead of our exuberant open as they seem to have the same "wait and see" attitude ahead of our expected rescue plan. The ECB continues to pump out data that points to an EU slowdown and there was a disturbing article in the journal that the ECB, like our Fed, may be out of ammo in dealing with the financial crisis. So, we literally CAN NOT take any more bad news!
With a dozen Presidential candidates running around the country, everyone seems to have a plan to bail out the economy. I will officially throw my hat into the ring this weekend as I expand on my two-pronged attack on housing and energy that I outlined for the members this week and I call upon my Florida readers to gather up signatures to put my on the Republican ballot (I hear the field is wide open there). While I may not get to be President, nothing would make me happier than getting to debate these guys!
There's really no good news out there and we've had enough bad news so I think it's best that we take a moment to meditate on the markets before they open. We are a LONG way from yesterday's open so don't get sucked into buying things unless you LOVE them so much you are willing to chase them down to 11,500. If we go up 1,000 instead of down 1,000 then great – just remember Asia did both this morning so BE CAREFUL!
We will, providing we hold these levels (up 150+) continue with our bullish 1/2 covers on most positions, but if we can't hold the open, 3/4 covers at least on open contracts and less open contracts and more cash!
