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SMF Blogs > SMF Market Summary > December 2008 > Floor Talk: Equities rebound from late day sell-off; options expiration choppiness likely through re

Floor Talk: Equities rebound from late day sell-off; options expiration choppiness likely through remainder of day

The major averages are seeing a decent rebound this morning (Dow +122, SPX +15, Nasdaq +29), following a late day selloff yesterday that was triggered by S&P's negative revision to their outlook for GE's credit rating.

We noted yesterday afternoon that the GE headline itself wasn't that important (credit ratings agencies are largely viewed as being late to the party at this point), but the selling was likely exacerbated by shorts leaning on stocks ahead of today's options expiration. Opportunistic buyers took advantage of yesterday's late day weakness, helping the market rebound modestly into the close.

Then another batch of S&P ratings cuts on a dozen major financial companies knocked futures moderately lower overnight, but news of an auto industry loan from the White House provided enough of a positive catalyst to send the broader market higher at today's start. Like the S&P ratings changes, the White House loan isn't a huge surprise either, but the removal of the immediate threat of an auto bankruptcy has given buyers an excuse to step back in.

Although these news items make headlines, the undercurrent from options expiration is likely influencing today's trading more than the auto industry or ratings news. Options expiration choppiness combined with lighter staff on trading desks due to inclement weather in Chicago and NY should lead to a choppy session as we head into the weekend and upcoming holiday week.
 
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Posted: 12/19/2008 12:57:07 PM by StockMarketFunding | with 0 comments


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