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'How Am I Supposed to Trade on This?'

"How am I supposed to trade on this?" one befuddled trader said to me. He was referring to the fact that S&P futures had swung in a 50-point range(!) overnight.

This, of course, is what the search for a bottom looks like—messy, confusing, and not in a straight line.

Elsewhere:

1. Bank of America up 6 percent pre-open...but the talk is of the preferred stock, not the common...many of those preferreds are now yielding north of 9 percent. This is not quite the levels of 2008, when most were yielding north of 10 percent, but still.

Glenn Schorr, an influential bank analyst with Nomura, met with BofA CFO Bruce Thompson: "Management sees no need to raise capital at this time (and regulators haven't asked them to)," though Mr. Schorr noted, "we've all learned the hard way to never say never."

Morgan Stanley noted that relative to 2008, BofA is benefiting from: a) more capital; b) greater liquidity; and c) larger loan-loss reserves. There are higher claims for representations/warranties (largely taken) and more visible lawsuits (likely to play out over a long time frame).

2. Europe Down, But Not Out: Germany’s DAX is down for an unprecedented 10th consecutive day, falling nearly 2 percent today. But that’s far better than the 7 percent drop it saw earlier in the session. Still, the benchmark is down an astonishing 21 percent over the past 10 trading sessions.

Down most of the morning, other major Europe indices have pulled off far from their lows: U.K.’s FTSE 100 flirts with a gain after falling as much as 5.4 percent, France’s CAC 40 up 0.5 percent now after a 4.6 percent drop at session lows.?

3. Commodities Rebound: After lagging throughout most of Monday's trading, commodity stocks are rebounding 5 percent to 10 percent early on. Rio Tinto up 10 percent, BHP Billiton up 7 percent, AK Steel up 6 percent, Halliburton up 5 percent, Arch Coal up 5 percent.

That comes as commodities have risen on the day. Gold up yet another 2 percent and copper up 1 percent. Meanwhile, oil is now up 1 percent—back above $82 a barrel after falling below $76 a barrel late Monday night.

4. Federal Reserve Open Market Committee Meeting: "Not a lot of options" was a phrase I heard all day Monday and this morning from traders. They can do more quantitative easing. Many feel they will emphasize that rates will remain low for an extended period, but may even define what that extended period will be: Until employment or inflation hits certain targets, for example. They can also reduce the rate paid by banks for deposits—currently 0.25 percent— which would discourage banks from keeping money with the Fed and might encourage more lending.

My mailbox is full of comments that we have given up most of the gains from the Fed's second round of easing (QE2)--that's not quite true, but close. When Fed Chair Ben Bernanke gave his Jackson Hole speech that indicated QE2 was coming on Aug. 27, the S&P was at 1,047. The S&P closed Monday at 1,119, so we have given up 77 percent of gains.