Daily Market Recap

We started the day off with bad news very early this morning from Europe’s largest bank, UBS. The bank announced that it expects to record a $10 billion write-down for its subprime holdings and anticipates reporting a net loss for the fourth quarter versus its prior expectation that it would record a profit. UBS added that it was possible it could report a net loss for the full year. Then they reported the government of Singapore and a Middle Eastern investor would be making a sizeable investment in the bank.
Then came bad news from MBIA, it warned that its mark-to-market losses will be greater in the fourth quarter than in the third quarter. Fortunately, the market concentrated on the indication that private equity firm Warburg Pincus is going to strengthen MBIA, with a $1 billion investment. There was M&A activity as well, which created a positive tone as we (see below).
The Financials were up 2% today, have lead this rally (12% since bottom) and for this rally to be sustainable they will have to continue leadership. Along with the other bull markets to follow Oils and Gas exploration and services, Minerals and mining, Aerospace and Defense, and finally Tech cause they were the last to bottom.
Industry performance today: Bank +2.4%, Broker +2.4%, Housing +3.4%, REITs +2%, Coal +1.9%, Gold +1.7%, Trucking +1.6%, Chemical +1.5% and Oil Service +1.1%.
Technically: We have run nicely off last Tuesday's low has run in to some light resistance (1520 on S&P 500, 2724 NASDAQ Comp, 13750 and Dow) but mostly people are just nervous ahead of the FOMC meeting tomorrow.

In my opinion Bernanke has to lower rates by 50 basis points. He must also say that FED is more worried about the growth of the economy than inflation, and finally they must communicate that it wants to provide liquidity to ensure the proper functioning of the banking system. I am all in so I have nothing new to buy, see previous posts to see what I have been buying. All the positions except a couple are profitable except JCI (-3.4%) and PCR (-1.3%). MTL and VIP are up 28%, ITB up 21%, MDR and NOV up 11%, FCX and MTW up 9%, XLF 10%, OIH up 4% and BVN up 2.4%. I will take 1/3 of the table If FED does what I hope, and let the rest run into resistence hoping for pullbacks to buy.

If FED doesn’t go 50: Buying protection to the down side with close stops, it will soften the blow, buying some puts, DXD, SDS and QID ahead of the FED.