Dow had it's biggest gain in 5 years, up 417. Gainers outnumbered advancers 10-1, an eye popping event. NAZ was up a whopping 86. The rally followed the FED's announcement that they would accept mortgage backed securities as collateral. This is technical & tough to understand, I'm still struggling to figure it out. It's not open ended, only AAA, etc securities can be used. Markets took this as a huge plus aimed at helping relieve the credit mess the US & world are in. Around midday, when the Dow was up 135, it took off & didn't stop rising until the close. Steady buying is considered very nice but also worrisome. A one day rally conjures up amateurs piling on, driven by emotion.
Just yesterday evening, I saw a money manager talk about the short term future (roughly 6 months) for financials as being uncertain with a strong bias on the ugly side. He said problem loans will get worse & high yields on bank kind of securities are suggesting more div cuts are coming. Bear Stearns (BSX), up ONLY 61¢ on a very strong day, remains under a cloud which first appeared last Aug. Meanwhile, Asian markets will be open in a couple of hours & should follow thru on the gains in US markets.
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