WED. DEC. 3- Where's The Manic Craziness?

On Monday, the S&P 500 fell almost 9%. The Dow and NASDAQ followed suit. Yet, there was no hysteria. No headlines on the nightly news. No CNBC specials. No stories about people jumping off of buildings. As recently as three months ago, a 9% market decline would have been treated as the story of the year in finance. But now? Ho-hum. Even weirder was the main reason given for the decline. Namely, the cadre of economists whom comprise the National Bureau of Economic Research – an organization which classifies business cycles- decided in their infinite wisdom that the U.S. economy has been in recession since December 2007. Really? We didn’t know that already? That’s what caused the Dow to fall 700 points? No. There were two reasons. First was a decline in the rate of Chinese growth according to a Chinese economic report- something which seems innocuous, but is not as it is the world’s fastest growing economy of the major world powers. Equally important was that we were coming off of the best week for the markets in 75 years. So, much ‘profit-taking’ was attributed. The take-away is this: an amazing statistic- the rate of intra-day volatility on the 50 day moving average for the S&P 500 is the highest in history: 3.8%. This means that the average daily range for the S&P 500 for the last 50 trading days has approached 4% per day! There is nothing to signal that the wild intra-day volatility will dwindle dramatically anytime soon. So, to clarify from Monday’s post, December is a bit more illiquid and calm, but it does not mean- as shown by yesterday’s wild gyrations that the volatility is going to decrease by a wide margin. Thus, combined with the increasing dearth of players as the month progresses, it will make day trading that much more delicate as the volatility continues without a lot of liquidity.

Overnight, stocks in Asia were up about 1%-2%, but stocks fell in Europe after Research In Motion (RIMM) warned at 10:30PM last night. Like nobody would see it at 10:30PM. Thus, futures are well lower here. Look for that 1% or so down open with more choppy illiquid trading to follow. The market will likely follow RIMM all day albeit not in the same manner in which GE was followed yesterday. There will likely be a weak rally at some point, but look for a narrower intra-day range with the market staying on the downside much of if not the entire session.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


Good- The following stocks have good news and/or a strong technical pattern

MRVL- beat earnings estimates

MOS- after warning, closed near a high

IBM/AAPL – closed near highs

SLW- mentioned positively on “Fast Money” last night

SNDA_ closed near a high after posting great earnings Monday night

ETP- mentioned positively on “Mad Money”

MIR- closed near a high

PFG- up strongly and closed near a high

RAS- exploded on the last tick; will likely trade lower today, however

FCE/A- had short covering burst yesterday; if it opens unch or down, likely a buy thru 7 when/if it gets there

CEG- received rival takeover bid which could value company up to $52/share. Stock should be bought when/if it ticks above 26.50 and probably A-B-A2 all day

Bad-The following stocks have bad news and/or a weak technical pattern

OVTI- warned horribly for next quarter

RIMM- finished lower on a strong up day for the NASDAQ; likely to be weak anew today after warning badly, but from 6:30AM-7:15Am, stock gradually uptrended so don’t be stunned if this news is in the stock and it gets positive

GM, F, DAI- all asking for aid from government to fund operations for the duration of 2008

CLWRD- closed near a low post spin-off

BBBY- warned on its outlook

SWIR- closed near a low

FCX- warned and eliminated dividend

HE- issued shares at 23 in a share offering…should not trade below 23 thus if it opens above there, it is a short the first tick below 23







Earnings:


WED DEC 3 BEFORE

DLM

WED DEC 3 AFTER

ARO CPRT JAS

PSS SNPS

Good luck today.