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Minyanville's Market Recap: Stocks rebound from Market Panic!


Financial Short Squeeze leads the way for rebound! Recap the Day!

It was another very volatile session today. Stocks ended in mixed territory following a global sell off in Asia and Europe. The Dow ended up 0.65 points at 12862.12, Nasdaq ended down 7.76 points at 2451.07, and the S&P ended up 6.01

Investors woke up this morning to find a global sea of red ink as markets plunged in Europe and Asia putting heavy selling pressure on stock futures. Minutes into the session, the Fed decided to add a second injection of liquidity to the markets bringing today's total to about $17 bln briefly giving stocks a boost.

Adding to the bearish sentiment this morning was Countrywide Financial (CFC). The company's shares tumbled as low as 13% after the company announced it drew down an $11.5 bln credit facility. Read Professor Depew's Five Things You Need To Know for more insight into Countrywide's situation.

At one point, equity markets seemed as if they would never recover as rumors of a hedge fund collapsing pushed indexes to the lows of the day. The Dow was down almost 300 points. Economic data released today did not help either with housing starts and building permits coming in lower than expected. Initial claims came in higher versus consensus estimates and the Philadelphia Fed showed no growth in the region.

Amazingly stocks turned around midday with a short squeeze in financials. Bear Stearns led the way gaining 12.88% ending at $116.44. Many of the homebuilders also ended up in positive territory as well. Lennar (LEN) gained 3%, Meritage (MTH) gained 4%, and DR Horton (DHI) gained 1.4%. These stocks along with others helped push major indices to close at the highest levels of the day. Please Read Professor Cooper's Will Bulls Find Salvation? and Toddo's Is the Worst Over? for a look to where the markets are headed next.

The VIX reached its highest level in years. The markets are very volatile. Please continue to browse through our Risky Business Package and maybe even take a step back and evaluate your strategy. In addition, have a look at Professor Tatro's Time Travel For Traders to learn from your mistakes. Nonetheless, we'll all be back at it tomorrow. Have a good night, Minyans!
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No positions in stocks mentioned.

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