MER’s price action is very bearish. Yesterday there was a huge intraday battle in MER at 20. The sellers were in control into the Close as MER traded weakly to 18.65. MER found temporary support there. I started a short position at 19.74 into the close. I covered some at 19 and was holding the rest. And then a rumor hit minutes before the Close. The news wire flashed that MER and BAC were in talks. The XLF, LEH, MER jumped. MER traded close to 20 finding some resistance at 19.80. And then pulled back a bit to close near 19.35-19.50. Since there was so little time between the rumor and the Close it was difficult to tell how the market would digest this news. Premarket MER is 18.03 bid, very bearish.

I will be watching to see if there is weakness in MER on the Open. GS and JPM and MS are holding up well in this environment. GS bounced off of support at 150 yesterday, a bullish signal for the stock. JPM closed above 41, another bullish signal. MS above 38 is bullish signal.

Oil is flirting with $100. Below $100 and we will look for some weakness in HK, CHK, XTO, etc. We will be keeping an eye on this $100 level.

As we discussed yesterday make sure you have a good news feed. The last few minutes of trading saw volatile price action in the financials because of the BAC/LEH rumors. We will hear more rumors like this. And the stocks will move off of these snippets.

Good luck with your trading.