STOCK MARKET WATCH -- Wednesday, 31 October 2012

[Demeter]

6. How one superbull would trade the market open

http://www.marketwatch.com/story/how-one-superbull-would-trade-the-market-open-2012-10-30?siteid=YAHOOB

The New York Stock Exchange was not flooded during Hurricane Sandy, contrary to rumors. But the storm’s surge may be nothing compared with the trading wave that could wash over Wall Street on Wednesday morning, when U.S. markets reopen after being closed for two days.

Technical analyst Ralph Acampora is hoping for the worst. “Ideally, I’d like to see the market open down big,” he said in a telephone interview late Tuesday. “A bang, down 4% to 5%,” that rockets the CBOE Volatility Index VIX -1.71% up to around 25, “would scare the hell out of everybody.” A “bang,” with prices tumbling not from disappointing earnings but due to Sandy’s damage, would spur a new leg up, added Acampora...He isn’t saying this because Wednesday is Halloween. Acampora — the self-proclaimed “godfather of technical analysis” whose Wall Street career spans several decades — is looking for the first session of trading after the two-day closure to end a stretch of market weakness.

“Now we have a market that is oversold,” he continued. Investors have “beat up on the leaders. Sentiment got a little bearish. Those are all the elements you want to see in the climatic phase of a correction.”

Two days is an eternity for traders. Markets now must reprice securities from Friday’s close, factoring in Sandy’s aftermath, corporate earnings, month-end portfolio rebalancing and next week’s U.S. elections, among other issues....

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