If the Senate passes its version of the $815 billion stimulus plan will it really help the economy? Analysts at Barclays and Goldman Sachs don’t think it will help in the short term, and I agree. Last week’s euphoria around the bad bank plan created a very short lived rally in the S&P 500 and subsequently a great opportunity for short sellers.
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Personally, I had some success with the “buy the rumor, sell the news” trade as the markets rallied in anticipation of the House passing the bill, only to be followed by sharp declines upon fruition. I’ll be watching for a similar market rally and trading opportunity as the Senate moves closer to voting on its version of the stimulus package.