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Old 08-09-2011, 09:56 PM   Nav to Top  #1
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Money Market Soars 600 Points in Last Hour, Bank of America Bounces Back 17%

In the last hour of the trading day, the market soared over 600 points closing over 420 points from being down nearly 200 points on the DOW. What was the catalyst, it was a late reaction to the FED comments that they will keep interest rates low for a long time. Once the market started on the upswing, it accelerated quickly. Volume was huge today which is a positive sign, but I feel a bunch of it was short covering. Regardless, today was much more fun than the last 2 weeks. I can say that with a big smile.

Financials were a huge winner today after they have been crushed. Yesterday I wrote about how Bank of America was oversold and it bounced back nearly 17% today erasing majority of yesterday's loss. All other financials were higher as well. All of my European bank shorts, DB, HBC, CS were all up around 5% but I did not cover, I still like it as a hedge to the downside and I do not think Europe's pain is over yet.

Just about every sector was a big winner today, but I would be careful of getting too much euphoria, I would remain cautious. With the comments out of the FED today, we could get another downgrade from Moody's which would lead to another big drop. I wrote last night that I hoped QE3 would not be announced because of how it would hurt us long term more than the short term bounce. The last thing we need right now is a weaker dollar. We need to lick our wounds, de-leverage and start the slow climb back to growth.

One statement I heard on CNBC today that stood out was that after financial crises, it took on average 6-7 years to come out of it. Based on the fact that 2008-2009 was a huge financial crisis, we very well could have a couple more years to crawl our way back to positive growth.

Hopefully we get a follow up of buying tomorrow which will make today look like it belonged instead of just a short covering after being down 1200 points in 4 days (at bottom today). If you have cash on the sidelines and want to start nibbling as I have been recommending in the last couple of trading days, the stay with what has worked so far. High yielding stocks went up a bunch today, and I feel that is the safest play right now because they are limited to the downside with a big yield. Names like KMP, EPD, MO, NLY all are attractive. On the other end there are those secular growth names that will be bought regardless of recession. Names like SODA, GMCR, CMG. They snap back quick and run the longest on the upswings.

Yesterday at this time the futures were down 200 points and then when I woke up they were up nearly 200 points, so let's see what happens tonight as the DOW futures are up 33 points as we speak.

Good luck and have fun!


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