Market Notes and *Blue Plate Specials* 10/19 Portfolio Closeout

Market Notes
What with the elections being so five minutes ago, the market began the day flat, drifting lower while, in contrast, the VIX rose all the way up to the 22 mark, reflecting investors’ fears at what the Fed would do. The spell was broken at 2:15 ET by the Fed announcing their plan for QE2 along with their decision not to raise interest rates any time soon.

Following the usual schizophrenic post-Fed action, the market eventually swung to the upside with the major averages closing at near-term highs. The really interesting movement, though, was in the VIX. It was as if someone had sucked all of the air out of it because it promptly shed 2 ½ points, closing under the 20 bull/bear Maginot line. Now that traders know what the Fed has in store, they’re more certain of what they’ll be facing.

Does this mean that we can expect the market to rally further? Considering that the VIX has moved under 20 (for now) and bellweather indicators such as the XLK (tech ETF) and the Dow Transports (DTX) are breaking to new highs, it sure looks as if that might be the case. On the downside, a negative jobs report on Friday could derail the rally but unless it’s a really bad number, I don’t think it will have much effect.

The other concern is that this market has been fueled by economic events, and the lack of any really good news could send it into the doldrums. A choppy or sideways market is always worse than one that is directional. Just ask the Turtles.

Today’s portfolio close-out
The 10/19 portfolio was closed out today for a truly spectacular 11 day gain. Thank one-day wonder China Chen Zhou Mining (SHZ) and my good luck that I sold it on the day it popped.

[FYI, if you experience a terrific one-day pop in a speculative stock that you own, I strongly suggest taking a profit. The reason is that there is generally not enough buying interest (yet) to sustain a further rally.]

The 10/20 portfolio will be exited tomorrow.

Capture

[See 4/21/10 blog for further details on how these portfolios were constructed.]

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