Two Ways To Play: Stocks Ignore Confidence Plunge
Strengthen your portfolio in good times and bad.
The Conference Board's confidence index fell to 38, far below the 52 reading economists were expecting. The 23.4 point drop this month was the third-largest recorded, behind two plunges in the 1970's both linked to oil shocks.
Separately, the S&P/Case-Shiller index showed home prices in 20 U.S. metropolitan locations fell 16.6% in August from the same month in 1007. It was the fastest pace since the records were kept in 2001.
The markets ignored this data, however. The S&P surged by 91 points, or 10.8% to 940, and the Dow Jones Industrial Average closed up by 890 points, or 10.8% to 9065. It was the second-largest point gain ever for the DJIA.
For another perspective, see Professor Jeff Macke's A Great Buying Opportunity?
From the Bull Pen: Bulls should be cautious adding new positions after such a large move. Nonetheless, returning with the crude bounce theme, one can look to Exxon-Mobil (XOM) for a trade. Behavior at the $75 level is important.
From the Bear Cave: Professor Depew reminds us that this vicious rally should be taken in the context of a bear market. "Think about how you felt last Thursday. Or last Monday and Tuesday for that matter." It's a sentiment that Professor Jeff Macke also echoes. Those bearish can use the Ultrashort S&P 500 (SDS). One option can be to fade (read: buy) into $86 with a sell stop below that level.
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