Another interesting day today with things just not adding up quite right. Oil once again seemed to be the story of the day. With the dollar stabilizing today oil was just shredded. Still seems to me that mass liquidation is occurring in that market. It kept the market at bay and then the market really started heading south when S&P put GE on negative outlook saying there was a 1 in 3 chance in the next two years that GE would lose its investment rating. The market saw this as an excuse to sell off even though I am not really sure it is news. I think today gave you a great opportunity to buy on the dip. The cattle prod by the FED is working. For the third day in a row corporate bonds from investment grade to junk were up. Not only were they up but they surged. Small cap stocks for the third day in a row vastly outperformed the overall markets. Financials performed fairly strongly with several finishing strongly higher despite the 2% + sell off. Risk appetite seems to be definitely returning even when the market is selling off.
Friday is going to be very confusing and potentially violent with major options expiration occurring. This probably added to the sell off at the end of the day. Heard some rumors in the market that some firms with major hedges that would be naturally rolled over are having trouble securing credit to roll them over. I don't know but I would expect a plus or minus day tomorrow of over 2%. I think the odds slightly favor a major positive day tomorrow.
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