The Day that Was - September 19th 2007

The day started out rather well with the strongest volume being in the first few hours. Then by mid day the volume tapered down and the markets pulled back. The momentum was quickly wearing off as viewed on the chart patterns.

The news today out of Morgan Stanley (MS) was that they missed their earnings estimates and during the conference call that followed the share price continued to drop as they discussed their losses. This had an impact on the financial sector (XLF) but what strike me as even more important is that the trading volume on the XLF was almost 1/2 of what it was yesterday. If the rate cut is supposed to be so good for the financials, banks, brokers, and home builders then why would the XLF be showing weakness today. Could be the party from yesterday has ended and people are waking up from their hangovers and getting a clearer picture of what the rate cut may mean for the markets down the road? There was some real hesitation in these sectors today.

The home builders sector (XHB) was actually in the red today and the volume of selling today was higher than the buying volume yesterday. This is telling us that an uneasiness remains in the markets and the world is not so perfect after all today.

Tomorrow we have additional market moving events with Bear Stearns (BSC) and Goldman Sachs (GS) both reporting before the markets open.

The sectors which did the worst today were consumer discretionary,technology,banks,bio tech, retail, brokers, and the financials had trouble staying above water towards the end of the day.

Something else which caught my attention early in the day was the big drop in the advance/decline ratio. Yesterday it was mostly all up. Today that ration came back hard and the decline numbers started going back up again.

Tomorrow will be yet one more day in this crazy week of events. Stay tuned..