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Stock Market Does a Mid-Day 180 For No Good Reason (and Why That’s Great)

Posted on | November 13, 2008 Time: 9:35 pm |

And that’s precisely the “symptom” of recovery that we need to see from this market. We’ve spent so much time pricing in all the fear, tail risk, and earnings declines. We have battened down the hatches, as major indexes were down over 40% YTD entering the day. We’ve looked at the fundamentals, thought they were a cosmic gift…and gotten burned when our favorite stocks fell further.

Intel’s revenue warning yesterday afternoon sent initial shivers through U.S. and global markets, and when I saw INTC shares down 10% in the after hours session, I admittedly had a crisis of faith. I started wondering if I should give up on a long-focused, Secular Trends-based fund…who else besides me could possibly be focusing on secular, decades-long trends?

I Promise it’s Not a Rant

My post on Intel, like my post two days ago on Alcoa, went far closer to “rant-dom” than I ever wished to be. I had my own personal capitulation. Maybe, just maybe, the stock market did today too. After a mild open, stocks fell precipitously over the next two hours.

Um, I don’t know how to say this, but the market actually turned on a dime when….President Bush spoke. It might be the ultimate contrarian swing of all time. But the key is that there was no major catalyst for the market’s rally of 10% to close the day, including gains of 800 points on the Dow and 90 on the S&P 500.

Maybe it was fundamentals finally blaring their neon lights. Maybe short sellers have finally lost their nerve. Maybe there’s faith that other countries will follow Japan’s lead and lend hundreds of billions to the IMF on behalf of emerging market economies.

Whatever the independent reasons of investors were, they collated themselves today. Volume was very strong, stronger than we’ve seen on other rallies. This, as I noted in my weekly wrap-up from Sunday, is something I need to see to believe in a bottom. The jury’s out, but the evidence is compelling.

Ryan Barnes

More on this topic (What's this?)
Rolling Options on INTC Naked Puts (My Trader's Journal, 2/19/10)
Intel Corporation (NASDAQ: INTC): Q4 Earnings Preview 2009 (Stock Wizard, 1/10/10)
INTEL BEATS BIG, GUIDES HIGHER (THE PRAGMATIC CAPITALIST, 1/14/10)
Read more on Intel at Wikinvest
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