Jihad came to the London Underground yesterday, killing 37 people and injuring another 700 but causing only a hiccup on Wall Street. The Dow Industrials ended the day with a 31-point gain after selling off hard in overnight trading when news of the bombing first hit. Perhaps the markets were reassured by Tony Blair’s morning TV appearance shortly after a series of explosions brought London’s subway system to a halt. Whatever the case, financial markets both here and abroad appeared to steady as the day progressed, with sellers fleeing U.S. markets after around 6 a.m. Leave it to Da Boyz at Midnight Auto to figure out how much lower stocks must be manipulated before the last seller has been taken out.

With stock averages climbing, I put out a bulletin intraday asserting that it was a rally made to sell. But I must admit, the bullish finishing stoke in the final hour took me by surprise. I’m still convinced it’s a trap, though, mainly because the overnight lows decisively penetrated some hidden-pivot supports I’d flagged for the mini-Dow and mini-S&P. But bulls should take courage from the Nasdaq’s failure to confirm. I’d projected a minor-cycle low at 1462.50 for the mini-contract, suggesting bottom-fishing there with a tiny stop-loss. A it happened, the futures turned sharply from 1465.00 shortly before dawn, denying us an opportunity to board at the bottom. However, as the Naz rose we did manage to buy a few more July 36 QQQ puts for 0.05, an overvaluation of about 25% for July near-the-moneys. With six trading days left, however, and the markets merely feigning calm, we won’t quibble about the extra penny.