It was an easy day to be a day trader as the Dow was down triple digits at the open, and made slow steady progress to finish the day up triple digits. The bad taste from increasing jobless claims quickly gave way to some good news from bond insurers. From a longer term perspective the S&P 500 bumped up against resistance at the 1375 mark. What we will have to see tomorrow is whether or not the market can break through this level and find support, or if the 10 point drop in the last 5 minutes gave us a clue on what to expect as we conclude this week.

- JD

The Dow got whipsawed today after the Fed announcement. After rallying up to almost 200 points, the Dow spent the last hour diving, finishing down 40. Currently after-hours, its down another 100. The Fed has put on their party hats and spiked the punch but no one has joined the party. The VIX squeeked out a small .30 gain. The Bond market went crazy as expected after the announcement with the yield curve steepening and the craziness continuing tonight.

The real scary question is…

Now What?

- BA

How many times have you heard that one? Well this is going to be one time where that isn’t going to work. It’s time for everyone to lay their bets. I’m calling the Dow down 200 after the announcement tomorrow afternoon. As always, I will use a stop but I honestly do not see anymore upside to this market. We were extremely oversold and we have now worked that off. The Bond market was fairly quiet again but yields steadily rose throughout the day as equities firmed. The curve sloped slightly flatter. Let the fireworks begin!

- BA

A solid and quiet day all around with the Dow closing up 176. The VIX sold off almost 5% to 27ish. This snap back rally should be close to running out of steam with major news over the next few days. The market will have plenty to digest with Durable Goods Orders, GDP, the FED announcement and Unemployment all slated to be reported later in the week. The Bond market was extremely quiet and flatter thanks to the rally in equities.

- BA

The US stock market opened higher today, but closed sharply lower. In candlestick terminology, we had a bearish engulfing pattern. Both the Dow and the S&P tested resistance levels and lost the battle. The VIX on the other hand tested support and won. Neither one of these is a good sign. Last week’s low will most likely be tested again before this market breaks through on the upside. The question right now is, will that low provide support, or prove to be a bump in the road? Uncle Ben may have an impact on that later this week. While bearish option strategies looked like a good call at the close, you may not want to chase this market if it opens significantly lower on Monday morning. Might as well wait to see if the FED has cooked up another serving of rate cuts this week before taking any more action.

- JD

Could the fed have been forced to blink because of a massive unwind of a fraudulent trade at a French bank? This is shaping up to be some of the -strangest of times in the market that we have ever seen. This huge 900 point rally in 72 hours should be used to take any bets off of the table. If anyone insists on having long exposure, the best bet would be to buy the farthest out ITM Leap Call. I can think of no better trade than selling your stock and replacing it with a call. If you don’t want to sell for tax considerations, buy an ATM Leap put. There is one certainty in today’s market. Volatility is here to stay. If there is one thing I learned after 15 years of option market-making is that you always want to be short options during low volatility times and long it in high volatility times. NOT THE OTHER WAY AROUND! Investors who think that because volatility is high that you should be selling options do not get it. Option selling implies that you are taking the risk. During these times you want to reduce your risk by buying options.

The bond market got clobbered today and yields soared. The 30yr Bond was down 3 5/32 by the 5:00 p.m. electronic close. I think a belief is setting in that interest rates don’t have much farther to fall. The curve flattened significantly.

- BA

The bottom has arrived. Huge reversal day with lots of volume. This should be able to carry over for a few days anyway. Rumors of a regulatory bail out for the bond insurers ignited the market like a rocket today. Bears need to beware. With the fed watching the tape, is has to be demoralizing. Just imagine if we could get the Dow down 1000 over night. We could get the Fed to drop the Fed funds rate a full point!

The bond market suffered a major sell off after-hours when the rumors started cooking. The 10yr dropped a full tick and half, all after the official 3:00 p.m. eastern close. This was the largest after-hours move that I have seen in the last 4 years that I have been trading bonds. This lends some validity to the bond insurer bailout rumors. The curve was in flatten mode really only in the long end of the curve.

- BA

A funny thing happened on the way to the Dow opening down 500 points today. Uncle Ben decided that he did not want today’s title to be ‘Panic on Wall Street’, so he and the boys cut interest rates by 75 basis points. It only took about an hour for the market to get 75% of that back, which interestingly enough is where it ended the day. Day traders that faded the gap down could have easily booked some great profits and still made a noon tee time on the golf course. Now if you could only do something about the weather, that would have worked too, but I digress.

Today looked eerily like August 16th, 2007. The VIX was back at 37.5 and the talking heads on CNBC were wondering how far down the market was going to go.

This time though, the market headed north right out of the gate. It didn’t really stop until reaching the break even point (OK, the Dow and S&P 500 didn’t quite make it, but the Nasdaq and Russell 2000 were actually positive for a few minutes).

Unlike the bounce in August, this one did not hold. The market ended up giving back 25% of its rebound. Could the recovery continue? Sure, but it does not look like a very strong rally.

We’ve got to a lot more positive signals before putting this bear to rest.

- JD

While the stock market in the US was closed today for a public holiday, theDow futures were open today and closed down 520 points. Is this the washout that we have been waiting for? I hope. Stock markets around the world took it on the chin today. The best that we can hope for is a surprise fed cut of .50 right now.

Today Ben!

- BA

The Dow and the Nasdaq have reached levels not seen since March of 2007. Thanks to the Financials, the S&P 500 is in even worse shape, reaching levels it has not seen since September of 2006. All 3 of these indexes are sitting at support levels that could provide support, but I certainly would not count on that. It is likely that we could see a bounce from here, which again would be an opportunity to lighten up on any remaining long positions in your portfolio.

The safest place to hide lately has been the 3 G’s Grains, Gold, and Good old treasury bonds.

Those of you looking for a little more action (and potential return) than just moving to cash could always try trading Inverse ETFs, Put Options, or Short Futures Contracts.

- JD