Monday, October 12, 2009

Not a bad day for Intraday trading: + 7.25 Pts gain

Low volume days is no excuse to stop trading. There were good moves during the day session including one vertical breakdown to Prev Close.

On the S&P 500, 3,022 million shares were traded today. This volume output is 25% below the index's average daily volume generated over the past three months. On the E-Mini it was -29% less volume than the previous day.

Today's session was characterized as relatively dull; while a number of financial markets were open, the bond market was closed for Columbus Day, and no economic data releases were scheduled. In addition, trading volume is typically low on this day. Volume was in fact anemic today, with fewer than 950 million shares changing hands on the NYSE, the lowest volume output seen in two months.

With the NASDAQ 100 and the S&P 500 up six straight sessions, one might conclude that investors are banking on a strong earnings season. This of course remains to be seen; the next few days certainly have the potential to bring some excitement, either food for the starving bears or further ammunition for bulls. A large number of key names are set to report later this week including Dow components Johnson & Johnson, Intel, General Electric, Bank of America, JPMorgan Chase, IBM, and General Electric. Google, Nokia, Citigroup, and Goldman Sachs are also top names scheduled to report earnings this week.

Investors will pay particular attention to earnings releases from the influential financial sector. In fact, the rally that began some seven months ago was triggered by positive first-quarter results from banks. According to comments made by an influential market analyst today, positive earnings releases are expected from Wells Fargo, Morgan Stanley, as well as from Goldman Sachs; at the other end of the spectrum, it is anticipated that some 60% of the regional banks will post losses for this quarter (and likely for the next as well).

According to a new survey released today by the National Association for Business Economics, a vast majority (i.e., 80%) of business economists polled are of the opinion that the current recession has ended. That is the positive news; the negative news is however that these same experts believe that both the employment rate and the federal deficit will remain high throughout 2010. In fact, the economic recovery that is underway is 'likely to be more moderate than those typically experienced following steep declines'. The economists anticipate that the US economy might grow at a 2.9% annualized rate in the second half of this year, followed by a 3% gain in 2010 (percentages refer to the US gross domestic product).

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