Observations on the Current Market Rally

The Dow is up over 600 points the last 3 days.

General Electric (GE) has risen from the $5 level to $9.50. I should have bought a lot more when the stock was in the high 5’s. GE rose yesterday despite a ratings downgrade. GE dropped from AAA to AA+. Why is this important? Ratings downgrades raise the cost of obtaining capital in the credit markets. I am hoping that $5.87 was the bottom for GE.

Even American Express (AXP) and Capital One (COF) have risen over 25% the past two days. Both credit card companies still face rising delinquencies and defaults but the stocks appear to have been oversold. The companies were pummeled to the single digits.

Blue chip companies like Microsoft (MSFT), Pfizer (PFE) and Disney (DIS) have all bounced double digits from their 52 week lows set last week.

PNC Financial (PNC) might be a good short candidate. PNC is trading at $28.55 which is significantly higher than other regional banks like Suntrust (STI) and US Bancorp (USB). I know that PNC plans to pay back TARP funds but can they really do that until they know the extent of their real estate losses?

Comments

[Moon Kil Woong:]

For short term volatility traders the rallies and buts are great. For the economy and the market, they are not very healthy. For those looking for long term tops and bottoms I tend to use this rule of thumb.

If techs and biotechs have sustainable rallies and are taking the lead, the market may actually be sporting a sustainable long term rally. If banks are then you're looking at a trading range or relief rally.

In the end the economy moves and grows on real business not financial machinations.

Mar 13 06:32 AM

[prairiedog555:]

The Wall Street sharpies are setting the trap for us rabbits. Things are not that much better and the market is still overvalued.

Mar 13 07:44 AM

[oceansmike:]

Prairiedog555 ,,just say after me ,, I am a short ,,and all the negative articles and coments will not effect this rally,,try MB ,plenty of like wize short sighted short statue,short sighted folks,,its a rally ,so get over it ,,

Mar 13 08:16 AM

[anarchist:]

oceansmike, IMHO in a week or so you will wish you had some shorts in your portfolio as the snare tightens on the perma-bulls.

Mar 13 12:04 PM

[cubanstockp...:]

sell on the strength and buy on the weakness, translation, let the bears in and ravage the Markets or the bulls wont come in. now bulls are coming in. Neagtive news is now piling up but being ignored for vague good news.
Ex. "I have cancer, but I had a V8 today and I feel a whole lot better"

Mar 13 03:08 PM