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Oversold short-term prices and quickly fading concerns have a few bulls picking up some of the pieces from Monday’s historic percentage price shellacking. As of 11:00 ET the “Cubes” (QQQQ) and “SPYder” (SPY) are up approximately 2.35% on lighter nibbling.

Headline incentive for acting is rather thin in Tuesday’s first half other than traders’ collective tendencies to mop up and gleefully re-work Monday’s carnage as fresh opportunity. That being said, being plied to some degree for bargain seekers is “Obamaistic” testimony from the Big Three auto manufacturers up on Capitol Hill later on this afternoon.

The group of auto giants (GM, F and DAI) will be presenting their idea of a detailed plan for a new, improved and sustainable Motor City in order to receive a bridge loan of $25B from the TARP coffers. Shares of GM are up 0.25 at 4.84, F is tacking on a more generous 0.28 to 2.84, DAI is seeing a gainer of 1.85 near 30 and foreign-based industry leader Toyota (TM) is up 3.50 at 62.10.

Bulls are also taking a cue from leadership out of market heavy and Dow component and General Electric (GE) following its well-received general business update. Buzz in front of the report had many on Wall Street anticipating the company to lower guidance due to its GE Capital unit. However, with those expectations somewhat dashed with a weaker range view of $0.50 – 0.52EPS vs $0.50 – 0.65 and word of the dividend remaining intact for 2009’—shares are up 1.35 at 16.85 and acting as a decent support for today’s market bid.

In a very light session of officially-slated catalysts, a bit of analyst action is having a muted impact on the Dow Industrials (DIA) and possibly beyond. Shares of diversified manufacturer 3M (MMM) were cut to “Sell” from “Hold” at Citi. The banker cited concerns over a strong dollar (UUP) and a weak consumer spending environment.

Shares of 3M are currently off 0.90 at 61.45 after rebounding from session lows of 59.95. Technically, the latest action looks to confirm a one-month long double top within a larger bear flag. The bearish pattern falls beneath an established and failed two-year weekly double bottom now acting as resistance.

The newly minted bank holding company Goldman Sachs (GS) is also acting as a potential leash on bulls ability to run hog wild in their bargain-hunting efforts. The Wall Street Journal wrote the company could see a loss as much as $2.0B and more than five times current views. Separately, UBS cut its estimates to a level on par with the report in issuing a Q4 loss of -$5.50 per share for Goldie. Shares of GS are off 1.50 at 64.26 and scheduled to report its “lack of earnings” on December 16.

In sometimes intertwined markets, the action appears to confirming Tuesday’s market bid as the bargain-hunting variety, rather than one with oodles of longer-term and trend following implications. Black Gold (USO) is off 2% near 39, which suggests that some of yesterday’s trader concern over “How long and how deep” is still weighing in on the grease that turns the wheels of commerce. Separately, bonds as represented by the iShares 20+ Year Treasury ETF (TLT) are failing to back off its parabolic climb and therein still confirm a risk averse investor. Intraday, the TLT is off fractionally by 0.10 at 109.30.

And finally, heading into the lunchtime hour and the majors are slightly higher and just off their best levels of the session. Technically, the observation is with those gains coming on drastically lower volume and the price action back around the 50% of Monday’s precipitous plunge; bulls should be careful with their nibbling. The interpretation is yesterday’s distribution off the prior week’s counter-trend pullback is fair warning that any “buy the dip” opportunities could be short-lived until further testing is realized.

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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