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Market Recap: Shorts Cover, Tech Rallies, Dow Surges 300 Points


Aggressive short squeezing and upcoming expiration helped markets surge. Dow rises over 300 points.

Aggressive short covering in conjunction with upcoming expiration helped major indexes surge the most in two months. The Dow Industrials added 319 points, or +2.46% to 13,307, the S&P 500 added +41 points, or +2.91% to 1481, and the Nasdaq Composite added +89 points, or 3.46% to 2673.

Financials surged on the day as if many investors believed the worst of the credit crunch was behind them. News of Goldman Sachs (GS) stating it would not announce further write-downs sent the stock soaring over 4% within minutes. Goldman closed the day up +8.54%. Morgan Stanley (MS) added +3.89%, Lehman Brothers (LEH) added +9.18%, and Merrill Lynch (MER) added +7.07%. Not all were convinced, however. Toddo noted on the Buzz that the $60 level for Morgan Stanley was one of "ursine lore," and Professor Sedacca pointed out a potential bearish Head and Shoulders pattern on the Buzz. Professor Zucchi also questioned the market's action in What's Behind This Bounce?

The tech sector also recovered in today's session. Apple (AAPL) withstood rumors of slow iPhones sales in Europe as investors seemed to be focus on the company tapping the Chinese market via a potential partnership with China Mobile (CHL). The stock closed near its highs of the day, adding +10.5%. Other notables in the tech sector included Research in Motion (RIMM), +9.4%, Nokia (NOK), +5.2% and Baidu (BIDU) +14.4%. Toddo took the opportunity to reduce his position in BIDU. Get more on his trade with his Random Thoughts.

In retail, Wal-Mart (WMT) reported earnings of $0.69 per share versus $0.67 consensus on revenues $90.88 bln versus $90.91 bln consensus. Retail specialist Professor Jeff Macke noted on the Buzz, "Whatever you think of its assorted merchandising woes, Wal-Mart is truly the big-daddy of controlling costs."

In economic data, the nation's monthly treasury budget came in at -$55.6 bln versus -$59.0 bln consensus. Pending home sales data was also released with month-over-month figures coming in at +0.2% versus -2.0% consensus. Homebuilders reacted well to the news. Hovnanian (HOV) added +6.47%, Beazer Homes (BZH) added +4.17%, Lennar (LEN) added +5.44%, and Toll Brothers (TOL) added +5.12%. For more on homebuilders, read Professor Depew's Five Things You Need To Know. Also read Toddo's Answers I Really Wanna Know as he mentions some thoughts for the real estate sector.

In commodities, crude oil continued its slide down -3.45 to 91.70. Gold fell below the 800 mark, down -8.7 to 799. Silver fell -0.15 to 14.61, and copper fell -0.20 to 310.70.

For more summaries, click on Minyanville's Buzz Bits and Professor Tuttle's Winners & Sinners.

Earnings Review:

Here are some companies that reported after the bell:

Excel Maritime Carriers (EXM) reported $0.96 EPS versus $1.05 consensus on revenues $43.2 mln versus $45.3 mln consensus.

La-Z-Boy (LZB) reported $0.01 EPS versus $0.07 consensus on revenues $365.4 mln versus $371.6 consensus.

Xinhua Finance (XFML) reported $0.13 EPS, which may not be comparable to $0.11 consensus on revenues $40.7 mln versus $38.9 mln consensus.

Idea Flow

Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.

Some bullish trade or investment ideas: AAPL, WMT, GOOG, YHOO, CROX, MAN, FCSX, GLW, SPX, XLF, C

Some bearish trade or investment ideas: LM, HD, FIG, AMGN, EBAY, MO, USO, SPY, DE, SEI, AAPL, MS, AMAT, DD, BRCM, SPX, BAC, AMG, GS

Hope you had a great day and an even better night! See you tomorrow morning!
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