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An aggressive cheer for the details of the “New Plan Version 3.0” brings out those devilish bears and bulls willing to schnitzel in Wednesday’s first half. As of 7:45 ET the “Cubes” (QQQQ) and “SPYder” (SPY) are off 1.50% to 2.75% as an opening Hail Mary type play from bulls encounters a defensive end too strong to handle.

It’s been more extraordinary “business as unusual” on Wednesday and a bit of a Hump Day for bulls just getting wise to the game. An offensive out-the-gate Hail Mary was hatched by bulls following policymakers’ well-heralded bailout details for Version 3.0 finally arriving. However, on the heels of a two day historic game of offensive gains, the devil it seems is in the details as a “Sell the News” response has ensued.

Along with global relief efforts, stateside officials announced three new initiatives to restore confidence, liquidity and rescue the economy from the credit scandal / crisis. Highlights of the plan include $250.0B in recapitalization; half of which will go directly to nine Anchor Bankers (MER, C, WFC, BK, STT, BAC, JPM, MS, GS), with the government receiving a preferred stock stake in those companies. Additionally, new bank debt guarantees for a three-year period will be implemented, as will FDIC insurance for non-interest bearing accounts.

Acting poorly, shares of General Electric (GE) have been underwater virtually the entire session. Bulls could be concerned over the company having contemplated seeking a bank charter in order to secure funds and provide financial flexibility while the credit markets “chilled” per a story from Reuters on Tuesday. Intraday, shares of GE are gloomily off .80 at 20.20.

In related and intertwined markets, credit markets are finding a restoration of lost confidence and stability as global liquidity efforts take hold. Overnight Libor rates are off 0.2875 overnight to 2.1813. The TED (Treasury Euro-Dollar) spread, which indicates the banking sector’s willingness to loan to one another, has also come down by 0.0819 to 4.1986.

Elsewhere, confidence seems to be fleeting in the likes of Black Gold. The commodity jumped higher out the gate by as much as 3% as traders bid the contract on renewed optimism linked to the financial bailout and potential byproduct of stronger global economies. Unfortunately, in a Bob Dylan move of changing times, the consensus view has swung back towards fears of a drawn out recession and as a consequence, waning oil demand as folks revert to foot, pedal and public transportation. For its part, the US Oil Fund (USO) is off .70% at 67.30.

On the earnings front, shares of J&J (JNJ) are higher by 3% at 64.80 and still forming its own version of a “Mama Bottom.” Investors are reacting favorably after the consumer healthcare products giant posted “b-t-e” results of $1.17 per share, topping estimates of $1.11 and showing growth of 10% from the year-ago period. Additionally, sales grew by 6% and beat views and management effectively said, “No more tears” for bulls (apparently) by issuing issued FY08 guidance above Street views to a range of $4.50 - $4.53 from its prior forecast of $4.45 - $4.50.

Separately, it’s appearing that “Coke Is kinda It” over at Pepsi (PEP). Shares are off a sizable 9% at 56.15 after the beverage giant posted worse-than-expected profits of $0.99 or $1.06, depending on whom one asks and missing views despite a sales increase of 11%. Investors also owe today’s less-than-bubbly response to the company’s reduction of FY08 guidance below consensus estimates and news of six facility closings and global job cuts of 3,300, in an effort to reduce overhead by $1.2B. Management cited the global economic situation and strengthening Greenback as factors in today’s report.

Diversified machinery specialist Ingersoll-Rand (IR) is enjoying a better-than-feared reaction despite pre-announcing it’s reduced its profit forecast. Citing weakness stateside, Europe and a strengthening Greenback the company dropped its Q3 range views to $0.98 - $1.00 per share versus prior estimates of $1.05 - $1.10 which were above Street estimates pegged at $1.04. And for the full-year, management now targets earnings at $3.35 - $3.55 and south of estimates of $3.78. Intraday, shares of IR are up .20 at 23.50 but well-removed from session “Hail Mary” highs of 27.35.

And finally, “Back to normal?” Fed Chief Bernanke confidently said this morning the government’s plan would bring the markets back to normal. I guess that is true as traders opted for the schnitzel off generous (and surprise) Opening Bell percentage jumpers. However, normalized price volatility is still a part of the trading equation as the near 4% gap and subsequent 6% decliner has moved all the way back to the unchanged marker in the S&P500 as we make our way through the lunchtime hour.

What’s it all mean? For the time being, regardless of whether one sees the tea leaves as having put in the “Mother of all bottoms” or a historic bear market rally—we can rightfully say bulls, bears and hedge hogs but not pigs make money.

Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual. 

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