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MV Weather Report: Bulls Shake Off CIT Storm


Rain or shine, we review the day's biggest stock stories.

This has been one monstrous week for the market as the S&P 500 rallied for the fourth day in a row. Investors shook off the unfortunate CIT Group (CIT) news; no one covers the demise of a financial institution quite like Minyanville (see here, here, here, and here).

Three possible scenarios for today's rally are: Earnings have been better than expected, an options expiration squeeze, and retail investors chasing. The first one is the least likely as a lot of stocks have been bid up after Intel (INTC) and Goldman Sachs (GS) -- this was the reason for the rally yesterday. An options expiration squeeze is a very likely scenario as there are a 180,000 SPY contracts open at the $95 strike. This could propel the index to the 950 level. Retail investors typically miss the first move, they're known to chase up on days like today, and this is another likely scenario.

Pros miss the moves, too. Today on the Buzz and Banter, Professor Quint Tatro explained his trading situation.

"I got caught flat-footed this week and rather than fight or chase it, I chose to purge inventory and step aside. I am now in wait and see mode, protecting emotional and financial capital while the market action plays out.

"Rarely am I a contrarian as I will always typically let price action be my guide, choosing to be a reactionary trader, after a trend has been set, however I am scratching my head a bit today as I see and feel a bullish tone as if we've already broken out to new highs, when in fact we're stuck in the same range that we have been in since early May. Am I poopooing a 7% move in 4 days? Absolutely not! If you have caught the action, bravo to you because it has paid well, however I am finding it hard to change my cautionary position simply because we didn't crater into the depths earlier this week."

So where's the next stop for the market, S&P 1000 or 900? On today's Buzz and Banter, Professor Jeff Cooper gave his thoughts.

"Tuesday's N/R 7 (narrowest range in 7 days) could have been a Pause day prior to another thrust or a Paws day at the underbelly of the 50-day moving average. The momentum gap through the 50-day yesterday that extended after the first hour gave the verdict.

"Offsetting the midpoint of the range of the prior two months of 950 to 970 or what equates to 910 set the stage for an attack of the 'right shoulder' at 930 ish.

"Question -- is the SP tracing out another pause day prior to an extension toward 950?"

Tomorrow the index will have a good shot of getting to 950, the level of so many rejections. In the morning traders will be awaiting quarterly results from Bank of America (BAC), General Electric (GE), and Citigroup (C). Bank of America is supposed mirror JPMorgan (JPM). The biggest question General electric will face is, does GE Capital need more capital? Citigroup's quarter is just expected to be very messy as investors aren't sure what to expect from the once-great financial institution.

Also, before the bell, traders will pay attention to building permits and housing starts.

Did I mention tomorrow is options expiration day?

Have a great night!
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No positions in stocks mentioned.

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