TradeMaster Daily Stock Alerts Blog

Small-cap stocks are expected to generate a massive opening point rise this morning, soaring in response to additional emergency measures over the weekend to free up clogged credit lines. The Russell 2000 (NYSE:IWM) was up some 3% in after-hours trading, while S&P 500 futures were flirting with 5% gains. A 3% rise in the Russell would translate to an opening near 538.00.

Over the weekend, the Treasury Department said it was developing plans to purchase equity in financial institutions. Meanwhile, G7 finance leaders said they would use “all available tools” to combat the crisis, but didn’t appear to provide details about what those tools would be. However, the UK said it would pour some 37 billion pounds (about $64 billion) into big banks, a move that German and French officials also said they take. Also, this morning the leader of the new $700-billion bail out provided more details about how the program will work.

Financial stocks stand to take a big leap on hope that these emergency measures, with the Financial Select Sector SPDR climbing some 7% overnight. Also, Morgan Stanley jumped more than 20% after Japan’s largest bank said they would honor their commitment to purchase a large stake in Morgan Stanley.

Volume could be thin, and price activity choppy today as credit markets in the U.S. are closed for the Columbus Day holiday. Banks in the U.S. will be closed as well. Looking at overnight action, European shares soared some 6% ahead of the U.S. stock market open. Stock markets in Singapore and Thailand were up more than 5%, while Hong Kong shot up some 10%.

Looking at the chart picture, the big late rally Friday afternoon helped turn momentum around. An opening near 538 would be a logical test of recent chart zones on intraday studies; a rise through that point would leave 550, then 566 as the areas to watch.

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