Market Direction For Halloween After Hurricane Sandy – Coin Toss

After two days of the markets being closed, the longest break for weather-related closure since 1888, tomorrow markets will open. The question is will the market timing technical indicators from Friday still hold much value? That’s a tough call. My instincts tell me there could be selling because of concern over the damage the Hurricane may have caused the US economy. On the other hand there could be a nice rally off the oversold indicators, the notion of government and insurance dollars being pumped back in to rebuild and replace damages caused by Sandy. Stocks could have some wild swings on Wednesday.

Today despite the markets being closed there was still economic news/ The S&P/Case-Shiller home price index for 20 U.S. cities rose 2 per cent in August, year over year/ This is better than expected and continues to point to a bottoming in housing.

As well Disney Ltd announced purchasing Lucasfilms for 4 billion dollars. This type of acquisitions while so many investors worry that markets are on the verge of a major break lower, bets against any major recession.

For Motor Company reported 40 cents a share in earnings. This was beyond the 30 expected by analysts and marked a record profit margin of 12 percent but I still find it hard to put any capital into automotive stocks.

Meanwhile Apple seems to be having trouble. The company dismissed two key executives yesterday which begs the questions of is someone unhappy at Apple? Apple stock continued its decline on Friday. Many investors feel a bottom must be coming soon. Meanwhile Electronic Arts beat estimates with a jump from 5 cents for the same period last quarter to 15 cents but they lowered their outlook for next quarter.

President Obama Re-Election

Natural disasters can be game changing events when it comes to a presidential election. The hurricane may put to rest investors’ jitters over who may wind the Presidential election. History is on the side of the incumbent when a major disaster happens during the re-election campaign. Sandy couldn’t have happened at a better time for Obama. Monday and Tuesday Obama appeared on television, consoling homeowners, small businessmen, loved ones and promising financial aid without red tape. He seemed to be everywhere on Tuesday. Romney on the other hand was rarely seen on media outlets. This kind of publicity cannot be bought. This could put a lot of investors worries about the election results to rest. That could also help put a floor under the market at this point.

Unemployment Numbers On Friday

The unemployment numbers this Friday could be as important as the Hurricane to the election and to the market. With investors already nervous and the market sitting on the 100 day, if the numbers are bad, this could re-ignite Romney’s campaign and make it anyone’s guess. This would be tough for the markets to climb against. On the hand good numbers could clinch the election for the President. Friday is probably the most pivotal day of the week.

Best Market Direction Guess For Wednesday Market Opening

For tomorrow then, it’s a coin toss really. The past two days have taken a lot of the wind out of the market timing indicators which could be good or bad news. Investors hate uncertainty which could be a reason for selling stocks tomorrow. For the market direction portfolio, William is sitting it out now that he has been stopped out. For Put Selling I am going to be watching Walmart Stock closely but probably not doing very much.

Spy Put Trade

If the market direction opens up but weak, I will probably turn to my SPY PUT trade. A weak rally that has little volume will probably have no staying power. That will be my signal to buy spy puts.

Trading For Pennies Strategy With IWM ETF

Tomorrow I may be trading the Trading For Pennies Strategy with the IWM ETF if there is no clear direction. On the other hand if the direction is a big move either way, I will trade the trend with IWM.

Market Direction

IWM ETF Since July 2012

IWM ETF has been making a steady decline of lower highs and lower lows since Sept 14 2012. The ETF tried to rally above the 100 day moving average but on Friday closed just slightly below it.

The trend with the small cap stocks that make up the Russell 2000 (IWM) ETF is presently lower. Because of this those using the Trading For Pennies Strategy should watch rallies but take advantage of the trend which is lower. By staying with the trend an investor always increases his odds of success. Wednesday should be an interesting day.