Positive Midday Reversal

5:23 PM Update (Blain Reinkensmeyer): Several leaders of this market had very strong days today yielding good accumulation off of key moving average support. Google (GOOG) finished up over 3% on heavy volume to close at $648.54, Apple (AAPL) finished over 3% to close at $168.85, and a Research in Motion (RIMM) had a shaky close but up nonetheless as the stock climbed up about 2% to $110 even after being up as high as $115.50 on the day.

Important to note are the financials which the last two days have seen more bleeding, yesterday being worse than today. A handful of these companies are posting new long term lows, stocks like Washington Mutual (WM), Morgan Stanley (MS), and American Intl Group (AIG). As the financials continue to lose ground that will only put pressure on other stronger sectors such as Technology.

Last note here, don’t forget about other investment areas such Gold and Emerging Markets. The Streettracks Gold Trust (GLD) ETF had a very heavy accumulation day today closed at $79.44 as gold jumped in price. The Ishares Msci Emerging Markets (EEM) ETF posted strong volume today and closed right back near its 50 day moving average which is now technically resistance on its chart.

My favorite stock in these times is First Solar (FSLR), which sold off today but on lower volume to close at $207.33. The alternative energy company has continued to be red hot and has seen great price support even during these worrisome times in the market.

4:18 PM Market Recap (Sean Hannon): Today’s close was the first step in the right direction. We managed to reverse off the low of the day and close with modest gains. While the price drop and rally was not as severe as the one we experienced in August, this is positive action. For weeks we have been pressing for new lows as our short sales reaped huge rewards. With today’s action, we may have the first steps to a reversal.

At the close yesterday, our market timing model became oversold. As a contrarian indicator, we trade against this model when it reaches extremes. Considering that oversold markets can remain that way for some time, we have been searching for indications that it was time to get long this market. While one day does not make a trend, we are looking for opportunities on the long side. If the market continues testing the August lows and fails to breakdown, we would view it as a positive sign. Following our advice and buying stocks mid-day proved to be a profitable trade. We will continue to look for indications that the correction has passed and will be buying hand over fist when that time comes.

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