There's a calm in the market after yesterday's searing downdraft but traders expect sellers to keep trying to turn up the pressure. But so far though, the market is gaining ground. One trader said that financial stocks were turning negative early, but they've been lifted in part by shorts covering positions this morning.
"They're going to shake this tree some time this morning," said Kevin Ferry of Cronus Futures Management. The question is whether they'll succeeed. The sector to watch is the financial. It is up more than a percent after yesterday's pounding.
Asian markets took a beating overnight after Wall Street's big sell off Tuesday. European markets were weaker on the opening but sellers were pushed back. Wall Street opened higher, dipped into negative territory but was holding gains in mid morning.
Ferry said a lot of the selling this week came from momentum traders who were long the market. "The rally (last week) was substantial enough to move a lot of computer generated programs from short to long and I think that's the main thing that we were worried about," he said.
Ferry: "It's a world of agnostics...they are people who don't care if it's a bull or bear market. They're embedded in he process of the trade. The two settles on the first couple days of February put those models long..and that's really what let go yesterday."
Time Warner , which reported earnings today, says it sees earnings growth slowing in 2008. Goldman Sachs in a note today said investors will be listening to hear whether CEO Jeffery Bewkes presents a timeline for restructuring during the company's 10:30 a.m. ET call. So Far, Bewkes said the company would cut 15 percent of corporate costs.
The note said Time Warner is not expected to present a fully developed plan. The Washington Post today reported that Bewkes would use his first earnings call to outline plans for reshaping the company. It is widely expected the company will spin off Time Warner cable and ultimately present a plan for AOL.
Time Warner profit fell 41 percent to $1.03 billion on revenues of $12.64 billion.