Thrilling Thursday Wrap-Up

That was fun!

We got everything we wanted today – good, solid moves in the financials, a decline in oil and good breadth to a strong rally that hit all our modest level.  Unfortunately, the volume was low and we are probably going to have to wait until next week for confirmation that this wasn't just window dressing at the end of a bad month.  The weekly Dow chart actually looks pretty good but those bottom tests almost every week are a real killer.

Anotthe killer last night was DELL, who may have ruined our chance for strong follow-through tomorrow with a big miss on earnings but REVENUES were up 11.2% and above consensus so don't be fooled into thinking that Dell's business incompetence is a negative reflection on the economy, even though they whined about it in their outlook.  INTC sold off on the news and that dip is a great chance to pick up the Oct $22s for under $2.

MRVL beat with a 28.4% rise in revenues, also over estimates and margins held firm but gave weak guidance and NOVL beat as well AND raised guidance but DELL spooked them all so I like the NOVL Oct $5s for $1 too.   Overall, the market's performance was excellent, despite being dragged down by a 0.8% drop in the energy sector.  Oil closed near the low of the day at $115.55, one of the surest signs yet that this bubble is popping as even the winds of a hurricane can't keep it inflated anymore.

The overall Financial Sector tested the 5% rule and finished up 4.5% with Diversified Financial Service companies up 5.4% on the day while Thrifts and Mortgage Lenders jumped 10.4% on the back of FRE and FNM, who continue to tear it up with 100% gains off their lows of last week.  We got good Russell leadership (+2%) but the Nasdaq lagged as the 4 Horsemen (GOOG, AAPL, AMZN, RIMM) were under attack in what seemed to be a sustained effort to hold down the Nasdaq, which posted a 0.8% gain regardless.

What a difference a week makes on the Big Chart, we just ran the chart on Monday night as we needed to watch our lows and the Big Chart gave us the courage to stand by our positions on Tuesday as we skated along our critical levels without breaking down.  Thank goodness we did that as we would have been panicking just ahead of a 300-point rally!

We continue to get strong leadership from the Russell (up 4%) while the other indices played a bit of catch-up, led by the 4% rise in the Transports while the Dow, S&P and the NYSE all picked up 3% in 3 days.  The Nasdaq gained "just" 2%, held down by a flat performance in the SOX, which we really need to see something from and they broke the critical 360 mark and now we need them to hold it!

Asia remains a total diasaster but the FTSE and the DAX poked over the 50 dma and the CAC is well over theirs so we'll hope they can hold it together despite the economic turmoil over there.  Clearly US equities are the least sucky place to put money in Q3, if we can keep oil in check it may be time to get this party started.