TradeMaster Daily Stock Alerts Blog

Small-cap stocks are expected to open solidlylower, pulled down by a global stock market rout that has spread to all asset classes as investors dump everything in favor of cold, hard cash. The Russell 2000 (NYSE:IWM) was down about 2.5% in after-hours trade, which suggests an open near 487.00.

Around the world, a global stock market index tumbled some 4% to 5-year lows and is now off 43% in 2008. LIBOR, or interbank lending rates, pushed higher again, paying no heed to the cheaper money trying to be pushed into the system by a round of recent central bank rate cuts around the world. Crude oil futures tumbled 5% to the $81 level, which is a 1-year low, and even bonds in Europe and Japan were down, underscoring the fact that typical “safe-haven” ports were not in use at the crest of this storm.

Looking around the globe, Japan shares were down 3% to a 5-year low, while stock market trading was halted in Russia, Iceland, Romania, Ukraine and Indonesia and about half the market was shuttered in Italy.

President Bush is slated to make an address at 1000 ET in an effort to reassure investors and talk about the recent emergency measures. Meanwhile, finance chiefs for the G7 are slated to meet in Washington today.

Individual stocks to watch early today include Thursday’s big name – Morgan Stanley (NYSE:MS) was tumbled some 25% yesterday and was off another 6% overnight as credit rating agencies said they were reviewing the rating status for MS. General Electric (NYSE:GE) posted earnings in line with the forecast and GE shares were basically flat, perhaps a small relief as the stock is already down about 50% this year. General Motors Corp. (NYSE:GM) rallied about 3% ahead of the opening bell as the firm rejected any talk of bankruptcy.

The international trade report that came out at 8:30 a.m. ET and reflected a deficit of $59.1 billion, which was dead on target with the forecast of $59.0 billion. This is an August number and clearly isn’t at the top of the radar screen right now.

Looking at the chart picture, the structure resembles that of a runaway bearish freight train and shows no sign of an immediate bottom. However, the market is oversold (lowest RSI on daily charts in at least a year) and ripe for a corrective bounce ahead of the weekend. There is support on long-term charts around 482 and any weekly close back above the “figure” at 500 and the old summer ’04 low at 515 would be a minor victory.

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