Banks had an excellent relief rally giving the S&P 500 FINANCIALS INDEX one its best days in some time. Of course, it came off extremely depressed levels.
| Value 107.57 | Change 11.39 | % Change 11.8% |
High yield securities found buyers today. The Alerian MLP Index gained 5 to 182 as shown in the Yahoo widget on the right. REITs & junk bond funds also had an excellent day while the VIX plunged 8 to 44½.
Oil rebounded while gold was hit with more profit taking. Maybe some of that money from gold sales was used to buy stocks.
| CLJ09.NYM | ..Crude Oil Apr 09 | ..39.93 |  1.49 ....(3.9%) |
| ZGG09.CBT | ..Gold 100 oz. Feb 09 | ..970.20 |  24.30....(2.4%) |
Chairman Bernanke made investors feel better saying that the FED would not nationalize banks & the recession could end by later this year. He also talked about banks lending more & being prepared to cut divs to conserve cash for the balance sheet. His ideas sounded good but the FED's role in bank business & lending activity still has to be better defined.
Stocks Jump After Bernanke Says Recession May End This Year- AP
Fed urges banks to lend bailout funds: source- Reuters
The decline must the worst one since the depression. By way of comparison, at the start of 1973 Dow just touched 1000 on a wave of optimism. That year was awful, highlighted by the oil embargo driving up oil prices & inflation to what were record levels for modern times. The Dow kept dropping for more than a year. The total decline was more than 40%, dreadful. Then it took almost another decade before it tested 1K again.
The current peak was 17 months ago. After today's rally, Dow (7350) is down 48% from the recent peak.
Oct_9,_2007.........14,164
Asian markets will begin trading in a couple of hours with a strong upward bias. But economic reality will keep playing out. The markets will tell us if this relief rally has legs.
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