After a poor day on Friday, it looked like we were ripe for some downside follow-through, especially after a mediocre report from C. However, excitement over a possible victory by Republicans in Massachusetts, which would damage the health care bill and weaken Democrats, brought in the buyers, and we tended steadily upward all day. Much better action by AAPL and GOOG also helped the cause, but it was a very broad rally, albeit on lighter volume.
The market action today certainly anticipated a pretty solid victory by Brown in Massachusetts, so it is going to be interesting to see how accurate the prediction will be. There is no exit polling being done, because the media organizations never anticipated that Brown would even have a chance, so the results may not be out until late tonight.
The other big news event is earnings. IBM just reported and was slightly ahead, but the stock is seeing some mild selling on the news. As with INTC, the news looks solid, but the stock traded up strongly in front of the report, and that tends to cause some profit-taking.
We have a number of large banks reporting earnings in the morning, and that should help set the tone for the market but politics will likely be the focus of attention. If the Republican does end up losing, we'll probably see a gap down, but the more pertinent question is whether this market can build on today's strength should expectations prove correct and Brown pulls off the upset.
This market is primarily driven by news right now. We have good potential for some drama in the next couple days, and I'm just going to stick with my core longs for now and will try to react very quickly as things develop....
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