It’s official. After a week of haggling, the House finally approved the $700 billion government bailout of the financial industry on Friday with President Bush quickly putting his John Hancock on the bill. It was almost a foregone conclusion that the bill would get passed and the bulls on Wall Street were hoping for a snap-back rally but their hopes were dashed once the vote was approved. The market had been higher by 300 points heading into the tally but reversed course once the decision was announced.

The Dow finished Friday lower by 157 points to close at 10,325. The Nasdaq dropped nearly 30 points and closed at 1,947 while the S&P 500 fell 15 to settle at 1,099. For the week, the Dow lost 800 points. The “rally” that was suppose to follow after the approval of the bailout was wishful thinking by the bulls. The market gave us so many signs that there wasn’t going to be a rally as it quickly turned its attention on what lies ahead.

So what is next for the market? Of course, the big picture in the whole scheme of things is that the housing market will have to get better before we can ever have a sustained rally but the here and now will be earnings. Yeap, earnings season is here and they will start trickling in this week. The heavy-hitters, companies that will certainly move the markets, come in the following week.

As far as the financial stocks, they retreated as well. Goldman Sachs (GS, $128,00, down $3.54) was trading as high as $142 before falling 14 points after the announcement. The October 135 calls (GSJG, $6.90, up $0.10) were profiled on September 24 at $6.90 and reached a high of $12.00 before the sell-off. I’m sure we will be trading this one again.

JPMorgan Chase (JPM, $45.90, down $3.95) was also doing well heading into the bailout vote, trading over $50 but fell 8% afterwards. The October 47.50 calls (JPMJW, $2.20, down $2.40) were profiled at $2.75 on Wednesday and reached a high of nearly $5 before dropping 50%. I warned you of this on Thursday and if you didn’t take profits then or on Friday then shame on you.

There’s much to debate about the bailout but now that the market has gotten this out of the way, it’s all about earnings for the next few weeks. Expect much of the same volatility we’ve been seeing but remember, October is always full of tricks and treats when it comes to the market.

Rick Rouse