The Only Stock That Really Matters Today

After the market closed yesterday, The Wall Street Journal trumpeted that
"the Dow is up 5.6% this month, the fifth best start to October since 1900 and
is down just 0.5% for the year." This, after the Dow had another triple-digit
gain and its fifth advance in seven sessions. But how long can it last? A
headline-driven market advanced U.S. stocks yesterday following European stock
market gains. The gains were made after assurances that Slovakia will approve
the deal despite their earlier rejection of it. And so Europe's bourses rose
as the perception of lower risks in the banking sector diminished. Yesterday's
low volume of just over 1 billion shares on the Big Board and 532 million on the
Nasdaq is hardly a plus for the bulls. But they will take heart in advancers
over decliners on the NYSE by 3.8-to-1 and 2.8-to-1 on the Nasdaq though both
are not indicative of a breakout. The day ended with a dramatic 100-point fall
from its intraday high (Dow) and a late rise in the CBOE Volatility Index (VIX)
of 1.47 from its low to a close at 31.26 a number that still smacks of a
pullback. Yesterday's advance took the Dow into its immediate overhead
resistance. But the final sell-off closed the blue-chip index just under the
resistance, which begins at 11,550. Note that the stochastic is overbought.
Unlike the Dow, the S&P 500's intraday high failed to poke into the resistance
zone pulling back in the last 90 minutes but closed higher by 0.98%. It too has
an overbought stochastic. The Nasdaq is the only major index to make it into its
resistance zone, but only by 5 points. Note the opening gap at 2,587, which
could close on a lower opening or attract a late pullback today. In anticipation
of better-than-expected earnings from the financial sector, the group was up
2.7%, leading all other S&P sectors yesterday. And the jump by the Financial
Select Sector SPDR (NYSE: XLF ) shows it popping above its 50-day moving average
(blue line) and, like the indices, skirting the bottom of its next resistance
zone at $13 to $13.33. Conclusion: At 7 a.m., JPMorgan Chase (NYSE: JPM )
announces its Q3 earnings. Analysts estimate that they should be at 93 cents per
share. If JPM exceeds their forecast, barring any other disappointments, the
indices could move into the resistance zones on these charts and even rise to
the blank space between the upper range of resistance and their respective
200-day moving averages. But if JPM fails to meet estimates, look out below for
a pullback to the 50-day moving averages or lower. But there are ways to lock in
profits no matter what the market is doing, namely with options. Yesterday, one
of my colleagues locked in another winning trade for 63% profits in only five
days. If you're interested in getting into his next trade, click here . Todays
Trading Landscape To see a list of the companies reporting earnings today, click
here . For a list of this weeks economic reports due out, click here .