Strong Comeback After Wednesday's Drubbing

Includes: IVV, PNC, SPY
by: MyHappyTrading

We picked off a nice winner with PNC calls early this am, and look to do the same on some names early on Friday! Nice kaching here for a few hours time.

October 22, 2009
10:49 | Bagger Vance PNC ($51.12) Sold to Close PNCKJ Nov 50 calls, at $2.90 +61%
06:45 | Bagger Vance PNC ($49.60) Bought to Open PNCKJ Nov 50 calls, at $1.80

I was having a conversation with Happy on Wed night, and basically we were both stumped about what happened in the last 45 minutes of trading. Clearly nobody rings a bell to tell us it’s time to sell, and there are a million reasons to sell but only ONE reason to buy. That being said, we both thought the market was probably manipulated to a certain extent, thereby giving buyers another ‘chance’ to get in. Late in the day, Happy wrote the following:

October 21, 2009 1:08 PM
wow, this is just amazing… Both SPX and Nasdaq closed right at support (see article from last night)… very strange way to consolidate though. They tried and tried to push above SPX 1100, but, seemed like sellers were lined up at that resistance. So, they pulled the rug out and let weak holders fall out and perhaps trap more shorts? VIX closed right at 22… now, it has more room to fall… now, VIX has topped out again, perhaps the market can build up some momentum. I was wondering how things are going to happen… I guess this is how…

We’ll see what happens tomorrow… commodities can only take the market so far; financials need to see strength to give buyers confidence.

So, there you have it. Financials were indeed strong on Thursday and led the market higher. After some good earnings, which have been driving this market higher…the SPX is on the edge of breaking 1100. VIX also is conspicuous, but looks destined to break the 20 level soon. The dollar was strong early but faded late in the day, oil also bounced back strong. This resilient market continues to amaze. But in the meantime, we’ll just take what the market gives us and move accordingly.