2008-10-14 UPDATE: See comments section for article excerpts, links, and comments.
Why do I say continue, because as noted in Friday’s blog, it started from Friday morning’s low. From there to Friday’s high the DJIA rallied 12.9%. It is now up 25.4% from Friday’s low and 11.1% from Friday’s close.
Compare and contrast the front-page of today’s MarketWatch.com (above) and Friday’s (below):
That shift, from extreme negative (AFTER a week of capitulation-type action) to extreme positive is one of the three factors that signal the rally. The other two are the action of the market itself (the record-breaking rally) and the brand new investment theme (“the worst is over”). That theme can evolve and will over a number of weeks, as is typical, although it will likely be interspersed with bouts of doubt and volatility.
That’s all I’ve got time for today.
That’s from the front page of today’s Wall Street Journal website. Big contract to the pic from Friday (below):
That’s from the front page of Friday’s Washington Post website.
I will close with today’s Yahoo Finance summary (90% upside day) and volume leaders (24 of 25 stocks up) and by a show-and-tell update of my long trades from last week (see below). When looking at the volume bars, remember that today was a government holiday in the USA (Christopher Columbus Day).
First, the Dow Jones Industrial Average ETF (DIA) to put things in context. As noted above, up 25.4% from Friday’s low and 11.1% from the close.
MSFT: Microsoft lead the rally today, outperforming other high-profile tech stocks, such as Google and Apple (both also up big, but not as big). MSFT was up 18.5% on the day. Used limit order to exit.
OXPS: OptionsExpress rallied, but underperformed. It was up 8.9%. Used trailing stops to exit.
PM: Philip Morris outperformed. It was up 13.2%. Used trailing stops to exit.
EEM: The Emerging Markets ETF outperformed. It was up 22.8%. Used limit order to exit.
Regarding the QQV (NASDAQ QQQQ Volatility Index), it confirmed the reversal I noted on Friday.
Final note, just because we get a reprieve rally doesn’t mean the bear market is over (it also doesn’t mean it’s not over). As shown on the S&P 500 ETF (SPY) chart above, the prior bear market had two rallies that show on a quarterly chart. Circled to the right is the 2007 to ???? bear market, which not yet had a rally that shows up on a quarterly chart.