September 2008 Archives

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again

On days like today we always see headlines about how the day's point losses rank for the indices. But I'm always interested in where the moves rank on a percentage basis because that's the only way to do a comparison against history. A -777 Dow today, while a record point loss, was *only* a 7% loss and doesn't rank in the top 5 all-time but it is the 5th worst post-1940 or so. We're certainly seeing historic moves right now. So here are some of the worst percentage days for the major indices:

Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:

• October 19, 1987: -11.35%
• April 14, 2000: -9.67%
• September 29, 2008: -9.14%
• October 26, 1987: -9.01%
• October 20, 1987: -9.00%
• December 1, 2008: -8.95%
• August 31, 1998: -8.56%
• October 15, 2008: -8.47%
• April 3, 2000: -7.64%
• January 2, 2001: -7.23%

The S&P 500 had its second worst day since 1950. (The data's from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::

• October 19, 1987: -20.47%
• October 15, 2008: -9.03%
• December 1, 2008: -8.93%
• September 29, 2008: -8.79%
• October 26, 1987: -8.28%
• October 9, 2008: -7.62%
• November 13, 2008: -6.92%
• October 27, 1997: -6.87%
• August 31, 1998: -6.80%
• January 8, 1988: -6.77%
• November 20, 2008: -6.71%

There are a lot of October & September dates in that list!

And finally the Dow. I'm not sure where today's drop ranks but it's not in the top 5 (via Dave Manuel).

• October 19, 1987: -22.61%
• October 28, 1929: -12.82%
• October 29, 1929: -11.73%
• November 6, 1929: -9.92%
• December 18, 1899: -8.72%

From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fifth worst in modern times -- which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 "market breaks" it would be real difficult (if not impossible) to get another 22% down day. Here's the modern five eight worst Dow days:

• October 19, 1987: -22.61%
• October 26, 1987: -8.04%
• October 15, 2008: -7.87%
• December 1, 2008: -7.70%
• October 9, 2008: -7.33%
• October 27, 1997: -7.18%
• September 17, 2001: -7.13%
• September 29, 2008: -6.98%

Be careful what you ask for, you just might get it. I guess that's what some are saying this morning as the futures slide because people aren't happy with the bailout plan. For the second session in a row my broker has no SPY nor QQQQ to borrow. I've never seen that situation before. Perhaps that's because people have loaded up on those since they can't short financials. Whatever the reason it's a crowded trade right now.

On Today's Calendar:

• nothing

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:

I don't want to put too much emphasis on the short-term technicals right now since the reaction to the Fed's bailout plan will likely drive the market early next week. While both the Nasdaq and S&P 500 are sitting near resistance from their July lows I'm more interested in the next higher levels of resistance. If we get a rally I'll be looking for sellers to step in around those resistance levels.

First, here's a look at T2108, which is back near that important 20 level. Just one mildly bad day could push it into the buy zone (under 20). It's also interesting to note the bullish divergence in T2108 when comparing its July and September lows to those of the S&P and Nasdaq.

If & when we rally I'll be watching for sellers to step in around the 50-day moving average on the S&P 500.

Here are the Multiple Moving Averages (MMAs) on the S&P 500. The longer term averages (in white) are showing a strong downtrend serving as resistance centered near 1250.

I see some resistance around 2250 on the Nasdaq but it's probably good to run to its 50-day moving average as well.

It'll be interesting to see how the dollar reacts to the bailout plan. I'm surprised it held up as well as it did from Tuesday on. Maybe those were just for days of short covering?

Signs of life in the short-term trends but they face headwinds from the longer-term trends.

We're headed for a weak open thanks to "the deal" not getting done as rumored, RIMM's earnings and probably a couple of other things. It'll be interesting to see how the market acts today as folks try to position themselves for the possibility of "the deal" getting done over the weekend.

On Today's Calendar:

• 10:00 -- Mich Sentiment-Rev.

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Isn't this market fun? Here's what Rev. Shark had to say about the current environment, or as he called it, a freakshow market:

This is one of the most difficult markets I have ever tried to trade. Most of the experienced traders I know are frozen and doing nothing because the action is so random. I've heard this called a "freakshow" market because things are so far from normal. No one seems willing to trust a trade to work for more than a few hours, and that just adds to the randomness.

As both Alan Farley and Dan Fitzpatrick have said, we just have to wait it out. Just don't lose money now, and sooner or later, we'll get some better trading. I'd almost prefer a big one-day crash to speed things up, but I don't think it is going to happen that way. We are going to slowly and painfully work through this.

Ah, fun times. I happily sat on the sidelines Monday & Tuesday. But yesterday I tried my best to find something (anything!) to trade and couldn't find any setups I liked and I didn't like how the indices were acting. Fun times. I'll just stay in "preserve capital" mode until this madness passes.

On Today's Calendar:

• 10:00 -- New Home Sales

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I got a few emails from people who didn't believe what I posted about all the crazy action on Friday -- like ORCL and CMCSA hitting $0.01. Well, maybe they'll believe the Wall Street Journal, which has finally reported on all those bad trades. This is from the WSJ article 'Glitches Cancel Electronic Trades':

If the stock market hasn't been tough enough, glitches on several electronic exchanges led to thousands of canceled trades and stuck some investors with unexplained losses.

On Friday morning, as traders reacted to the Securities and Exchange Commission's short-selling ban, dozens of stocks and exchange-traded funds changed hands on electronic exchanges at bizarre prices. Some were more than double their closing levels Thursday; some were at unnaturally low prices, such as one penny.

Exchange officials blamed the erratic trades on unusually high trading volumes and initial confusion surrounding regulators' decision to ban short sales of hundreds of financial stocks.

Today was about as big of a rally as you'll ever see, yet the charts still look horrid. The 5% gains on the Nasdaq and S&P 500 only recouped a portion of the steep losses from yesterday, not to mention the losses for the month & year. It's interesting that the Russell 2000 lagged today with *only* a 3.3% gain given that it's been showing such strong relative strength. People were buying the most beaten down stocks as opposed to the ones which had been performing best. As a result T2108 only rebound back to 14.10. The bear hasn't been beaten back much as of yet.

I imagine we won't see much follow-through in the market until we get a "bailout" plan from congress that the market actually likes. Hopefully that plan will come sooner rather than later and we can get back to some kind of normalcy by earnings season.

No changes

Update @ 11:07 -- Looks like the credit markets are easing up now. Fed funds rate has dropped to 2.5% now...

Briefing.com just posted the following note about what's going on in the credit markets today. This is what many, including Art Cashin this morning, are very concerned about:

Floor Talk: Equity markets rebounding but credit remains very tight The equity markets are rebounding this morning (Dow +248, SPX +32, Nasdaq Comp +45), which is a positive sign of stabilization, with hope that Congress will eventually pass some form of a bailout plan following yesterday's rout. However, the bigger story today is taking place in the credit markets, which are not showing the same signs of stabilization. Virtually every measure of liquidity is showing extremely tight credit conditions demonstrating the credit seizure taking place. For example, LIBOR, which is the interest rate at which banks lend to one another, rose sharply with overnight LIBOR rising the most in history -- up to 6.88% from yesterday's high of 3.388%. And although it has since come off those levels, it means banks will lend but they have to pay twice what they did yesterday... The Fed Funds rate, the rate at which U.S. banks lend to other depository institutions through the Fed, rose to 7% this morning, more than 3x the 2% target rate set by the Fed. The fed funds rate has since pulled back from those highs to ~6% after the Fed added $20 bln to the system via a 28-day repurchase operation... Finally the TED spread, which is the difference between 3-month Treasury bills and 3-month Eurodollars (which is essentially the futures market for Libor) is at 3.5347, slightly down from yesterday, but still an extremely historically high elevated level... All this shows that banks are conserving cash now more than ever and are not comfortable lending in this environment.

I'm not sure if I'll put that IRA money to work like I said last night. I wanted to buy a flat or down open and I'm not moved to chase this gap up. So I'll just wait to see if the gaps get closed. I'm not sure what I'll do in my day trading account yet. As always I'll just take whatever's presented...

On Today's Calendar:

• 9:45 -- Chicago PMI
• 10:00 -- Consumer Confidence

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What can you say after a historic day like today? The indices had some of the worst percentage drops on record today. The Nasdaq 100 was down a whopping 10.5% today, largely thanks to it being heavily weighted to the likes of AAPL (-18%) and GOOG (-11.6%). Much of what I write tonight is going to sound a lot like what I wrote on September 17th. Like that day the fear gauges hit important levels...

I'll start with the VIX, which spiked as high as 48.40 today before closing at 46.72. MaoXian has a nice chart showing how important VIX readings near 50 have been over the last 20 years (click for the full size chart and the Chairman's remarks).

T2108 is back below 20 again. Earlier tonight somebody asked me if I think the market will rally tomorrow because of T2108 and some other oversold indicators. My answer is I have no clue what will happen tomorrow. Oversold can and often does become more oversold. The market can still fall with T2108 being below 20. As you can see in the chart below it's been lower than it is now in recent years -- the August 2007 low was 7.74 and the July 2008 low was 7.99. Having said that, I'll be buying some SPY or QQQQ tomorrow in my IRA. I'll have a stop probably about 10% lower and will sell at a profit when & if we get a bounce and I see signs of stalling.

Here are some longer term shots (each bar/candle is 8 days) of the Nasdaq, S&P 500 and Russell 2000 charts. The relative strength in the small caps is still very apparent. I don't have much to say about the other indices. I know people are looking for the next support level but I prefer to take the advice of one of my favorite trading rules -- "bear markets have no supports & bull markets have no resistance". Sure, there will probbaly be a snapback rally at some point in the near future but I'm more interested in identifying resistance in order to sell that rally.

Everything's down again