Monday, October 20, 2008

It's Unusual To Call This A Calm Day, But It Was

It isn't often that a day with the DJIA up around 400 points can be called "quiet," but that is the case today following the craziness of last week. Volume slowed substantially, and volatility cooled as well, which is exactly what we needed. Market players aren't interested in jumping into a market that is swinging 500 points or more per day. They want to see some stability and less random action. A highly emotional and uncertain market isn't attractive to most investors, so a few quiet days would help quite a bit.

Leadership today was primarily in oil-, steel-, coal- and commodity-related stocks, but breadth was very good overall, and there was little red on the screens. The great difficulty is that this has been a daytrader's market recently, and everyone is ready to hit the eject button at the first sign of problems. Trust levels are low, which means that time frames are extremely short, and that is what has been causing much of our volatility.

Earnings tonight from Texas Instruments and American Express will take center stage, and we'll get some feel for the level of market expectations. No one is expecting a lot of great earnings reports, but we really don't know what degree of badness has already been discounted.

I'm cautiously optimistic, and the action today didn't do anything to change my mind. I'd still like to see some tighter ranges, but at least volatility and volume did slow a bit.

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