Tuesday, April 1, 2008

April 1, 2008 -> My First day as Full Time Equity Trader

I did not have a good start today as I was losing money in this strong market. About 2 months ago, the 'R' word was everywhere ('R' - Recession). Since 2 weeks ago, there were talks about the worst of the credit crisis has passed and the bottom was seen. There were less appearance of the 'R' word. This made me think that when the Dow Jones Industrials index dropped 400 points on the start of the market on January 21, 2008 was the bottom. Dow Jones industrials index bottomToday the Dow Jones industrials index surged nearly 400 points, and all the major indexes were up more than 3 percent. The upside of the market was primarily of the news of Lehman Brothers Holdings. Lehman said that it was forced to raise $4 Billion in capital because of growing rumors that Lehman was facing the same kind of liquidity problems that brought down Bear Stearns. Lehman Brothers Chief Financial Officer Erin Callan said that they do not want to wait until they are in defensive mode, they raised $4 billion of capital Tuesday in a deal that could boost Lehman's outstanding share count by about 15 percent, but could also stop questions about the investment bank's stability. Lehman also suspects that short sellers were spreading rumors about the company to push its stock down. Big write down from UBS ($19 Billion) convinced some that the worst might be over for the Swiss investment bank.

The Dow rose 391.47, or 3.19 percent, to 12,654.36. It marked the eighth-biggest point gain ever for the Dow, and the third time in two weeks it came close to or surpassed 400 points. There were few more reasons contributed to the gain of the market.

There were 2 economic data released on April 1, 2008:-
10:00am ISM Manufacturing prior 48.3 est. 47.5 Real:48.6
Construction Spending MoM prior –1.7% est. –1.0% Real:-0.3%

Although the ISM Manufacturing index below 50 level signals contraction in the sector, it is still better than the forecast and the better than expected construction spending also has helped to push market to new high.

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