Monday, October 13, 2008

NASDAQ Technical Picture - Bear Market Bounce

The S&P 500 rose 104.13 points to 1,003.35. The Dow increased 936.42, or 11 percent, to 9,387.61, eclipsing its previous record 499-point gain in March 2000 and posting its best percentage advance since 1933. The Nasdaq Composite Index climbed 194.74, or 12 percent, to 1,844.25. Sixteen stocks gained for each that fell on the New York Stock Exchange. Finally, I was getting weary of shorting and watching my retirement portfolio shrink.

WSJ is reporting that The U.S. government is set to buy preferred equity stakes in nine top financial institutions as part of a comprehensive plan to tackle the credit crisis. It's unclear how much would be invested in each institution. The move is designed to remove any stigma that might come with a government investment. Banks receiving government funds include Goldman, Bank of America and Citigroup. Futures rising in after hours on the news.

Todays' rally was broad based with 16 stocks up for each one down. Oil was up 20%, followed closely behind by broker dealers at 19%. Small caps underperformed with the Russell 2000 up 9%. Volume was above average but well below Friday's, probably in part due, to Columbus day (semi-holiday). The NASDAQ carved out a bullish V bottom, but watch for resistance at last week's gap in the 50-62% retracement zone as highlighted on the above chart. The S&P printed a bullish doji morning star reversal pattern.

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