Out-the-gate respect for the lore and lure of Yom Kippur has found a nemesis in the financials in Thursday’s first half. As of 11:00 ET the “SPYder” (SPY) and “Cubes” (QQQQ) are showing mixed reactions from a further pruning of .35% to a lil’ nibble of 1.30% on lighter but still elevated efforts at daytrading.
Despite its non-inclusion in the tech-heavy NASDAQ 100 (QQQQ), Big Blue (IBM) is supporting some big green for that index—relatively speaking of course. Last night the IT giant announced surprise “b-t-e” preliminary results of $2.05 for its upcoming third quarter and four cents above Street views. Additionally, the company reaffirmed its fiscal year outlook of $8.75 per share.
Investors have responded by bidding shares of IBM on the day. Unfortunately, for “early bull” buy orders responsible for sending shares surging up to 95.31 out-the-gate, the current 0.70 gainer of 91.25 is less of a bargain. In sympathy, Apple (AAPL) and Research In Motion (RIMM) are posting similar and now slighter percentage gains, while shares of Hewlett Packard (HPQ) get schnitzeled a bit harder near unchanged on the session.
The day’s other top story for bulls and one that’s also lost its early grip is word from the Oval Office of the government considering ownership of private banks. The proposal would look to compliment existing intentions of buying up toxic financial waste as part of the “New Deal Version 2.0.”
On more common ground, bulls might be asking the question, “can’t we all just be friends?” Unfortunately, bears don’t seem willing to fully cooperate as the averages remain in a tug-o-war off extremely volatile and oversold conditions. Helping that grizzly bunch maintain their fear mongering ways is the now more easily summoned “Bear Raid!”
Last night the clock expired on the government’s mandated anti-patriotic act, which banned evil short-selling on 800 plus names ravaged by the credit market scandal, umm crisis. That being said, stocks like Morgan Stanley (MS) which continued to be pressured over the usual suspects of insufficient capital woes, alarming CDS levels and the likes—now have the bears, once more, to blame. Intraday, shares of MS are off 11% at 15 but removed from session lows of 12.59 following the latest bullish whispers of Japan-based Mitsubishi interested in acquiring the firm.
Wells Fargo (WFC) and the “in play” Wachovia (WB) are also seeing some potential added bearish musculature in their shares. A compromise involving Wells taking 75% to 80% of Wachovia’s investment and deposits business and Citi (C) receiving 20% to 25% has hit a roadblock over branches in the mid-Atlantic region. While that might sound a bit like something out of Monopoly—funny money its not, as bulls (and bears) shed and shred 3.60 off WB, 17% from WB and a lesser .25 to 14.15 at a still #$@$!! Citi.
Bears have also come out of hibernation in Prudential (PRU) amongst others as the lift on short-selling rules leaves its marks with no real news to speak of. The financial services giant is leading the laggards list within the now less-regulated financial (XLF) sector. Sympathy weakness involving lots of downticks can be found in names such as Zions Bancorp (ZION) and BB&T (BBT) and PNC Financial (PNC).
And finally, the market remains the captive of the financials and far too many potential market moving stories too keep track of. Rather than naming names (MET, ANF, GM) and rehashing stories of the latest reasons behind investors motivations, it’s thought a lot more important to recognize other news worthy items like a simple 5-Minute chart requiring bulls (and bears) to absorb 1% to 2% risk in the bulk of equities—if traders are considering testing the waters. That being said, conditions remain tenuous. Working our way through the lunchtime hour, the major averages continue to find mixed pin action to their liking—and now; broken Gravestone Doji’s the latest price of doing business as usual in a mad money market.
Chris Tyler
Staff Writer & Options Strategist
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