Target filled at 1078.50 for +13.75 Pts or $687.50

Short position executed as expected. The clue was in the negative reaction to positive earnings reports on key stocks.

Investors continued to react to earnings releases from key players with a sell-the-news reaction, with the notable exception of Google's earnings (see our comments from yesterday's report). Today, even positive earners were sold off sharply (case in point, IBM), not to mention companies that divulged they were having issues due to the slow economic recovery (this was the case today for General Electric, and for Bank of America).

GE disappointed investors with weaker-than-expected revenues; Bank of America announced it had generated a loss of $1 billion. Much of what we saw today was attributed to profit-taking after the market's stellar run, but it cannot be overlooked that investor enthusiasm has cooled somewhat based on the emerging earnings picture. One market economists was quoted as saying today that 'The disappointing results from Bank of America and GE do not mean the whole earnings season will go sour, but it is raising a question mark among investors'. Even IBM, which came out yesterday with better-than-anticipated results and which had raised its earnings forecast for 2009 for the second time in a row, had to admit its topline growth was lower than for the previous year.

To add insult to injury, the bulls were not able to count on their recent ally, the steadily sliding US dollar, to boost equities today. In fact, in a change of pattern, the US dollar gained 0.2% against a basket of currencies. That in turn weakened commodity prices and commodity-related equities.

Today's economic data releases were also not fully favorable, particularly in regard to consumer confidence. According to the latest data from the University of Michigan Preliminary Sentiment Consumer Survey, consumer confidence came in below expectations (of a level of 73.3) - at a reading of 69.4. On a positive note, September brought surprisingly strong industrial production numbers, an increase of 0.7% in September (0.2% above expectations).