Today was one of the more crazy days one will ever see on Wall Street. The Dow was down 343 points at 1 pm, and then miraculously closed down only 15 points. The S&P 500 actually closed the day with a gain of 4.55 points. The whipsaw action amazed traders everywhere, and the volume was extremely high. N
otably, the volume was highest in the final couple of hours when the rally was taking place.
Who were the leaders in the market today? None other than the much maligned financials. The Bear Stearns Companies Inc. (NYSE: BSC) was probably the best example of the madness in the market today. At around 1 pm the stock sat at 101.23, down a couple points on the day. By the end of the trading day, BSC was up to 116.44 up about 13%. Remember this is Bear Stearns, not the latest internet crazed stock, so this kind of move in 3 hours is nearly unbelievable. All the major banks held up well all throughout the day, as financials were the strongest sector in the market most of the day. Citigroup Inc (NYSE: C) finished the day up 4.25%, and JP Morgan Chase and Company (NYSE: JPM) finished up 5.74%. The largest story of the day was the Countrywide fiasco, but even that stock rallied toward the close. Earlier today we took a closer look at exactly what is going on at Countrywide.
The amount of volume behind the buys in the financial sector was quite remarkable. JPM, C, and BSC all did in the range of about double their normal daily volume. Today was a day with a large amount of volume and a huge rally back into the close that I like to look for when looking for a bottom. I expect tommorrow to be a real battleground day, with sellers looking to regain control and bulls looking to continue a rebound.
The last couple minutes of the trading day today actually brought some selling which relegated the Dow to a small loss rather than a 20 point gain as was seen with a couple minutes to go. I think the last few minutes of today's market is very much like what tommorrow will be, extremely volatile and very heavy volume.
I am personally beginning to take some very small long positions, but waiting on some confirmation to get back into this market in a meaningful way. I believe that investors should watch closely for the next few trading days and listen to what the market is telling us. There is no need to jump back in the market all at once. Essentially, I believe we are far closer to a short-term bottom than we are the top, but I'm waiting to see what kind of action occurs in the next few trading days. Stay tuned, this is a very fast moving market!
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