Wow was that ever an awful finish!
The worst part is I had to leave and I went against everything I said this morning and left open calls on the table and wiped out most of my morning’s profits.
This is a classic example of do as I say, not as I do!
It was exactly the kind of rally we didn’t want to see – too much oil and commodities until it caused renewed fears of inflation and flushed all the other participants down the drain. Another factor that flushed the market (and gives me hope for tomorrow) was a report of human to human transmission of bird flu in Jakarta which is already being discounted (but not by people piling into BCRX after hours!).
http://www.msnbc.msn.com/id/12939359/
If this turns out to be false there will be another try at an up day tomorrow as long as oil doesn’t spin out of control but it serves as a great example about how profits MUST be taken off the table as this market needs little excuse to massively sell off.
Another factor weighing on the markets is a persistent rumor that the scandal surrounding the back-dating of stock options may spread to involve hundreds of companies. As we’ve seen (and profited from) this is like your stock having a heart attack from which it may or may not recover (see UNH).
Oil shot up $1.80 to finish at $71.75 and copper was up 12% while gold tacked on about 2% but once again many of the mining stocks failed to respond. Gold traders are smarter (or at least better informed) than you and I and I will take the late dumping in gold stocks as an indication that the bird flu scare is way overdone.
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Today’s action was really too wacky to review with most of our picks starting out great and ending in disaster – great if you had stops, tragic if you didn’t!
No one was spared in the afternoon sell-off, even PD dropped from 7% to 4% and the oil plays turned down as well, reversing some big gains.
XOM lost a full dollar in the last 90 minutes of trading giving a very clear Valero Signal to get out right around 2:30.
The signal of the day, however was one I called this morning when TXN fell off a cliff at 2pm and began dragging the tech sector with it the second it broke below $32 (it went all the way to $31).
http://finance.yahoo.com/q/bc?t=1d&l=on&z=m&q=l&p=&a=&c=&s=txn
Today is a great day to separate the wheat from the chaff as some stocks showed real strength against the sell-off like: PFE, MRK, LNUX, EBAY, AIR, IMAX, GRMN, T, CBH…
About the only chance we have for tomorrow is that the rest of the world decides we’re nuts and finally goes their own way, either ignoring our markets and buying at home or bargain hunting over here (as a little plague doesn’t phase the Europeans who’ve been there and done that).
It will be a wild 15 hours until the bell rings again – let’s see what fun the morning brings!
