The markets surged today as oil fell again. Bank of America (BAC) and other financials moved higher on bargain hunting and renewed optimism that the worst may be behind. Merrill Lynch (MER), annouced that they would be offering more shares and selling their collaterilized debt for 22 cents on the dollar. The past couple of days have seen bank stocks pull back off of their initial surge. Volume however declined which is normally a sign of a lack of selling interest. Today, volume increased and we also had good internals. The stock was initially down but managed to close higher.
If this market continues to move higher, some new leadership stocks will begin to assert themselves in the coming weeks.
There is a tremendous amount of cash sitting on the sidelines right now. In addition, investor sentiment is terrible and over the past few days, there has been nothing but negative news on the economy. Also encouraging is that most of the analysts out there seem to think that this is just a bear market rally and that it will fail. I remember in March 2003 about the so-called double-dip recession that never materialized. I also remember talk of the 'jobless recovery', and how it was plastered on CNBC for weeks on end.
Consumer confidence also unexpectedly rose which helped the market. For now, we'll continue to hold onto our bank stocks and REITS and be patient.
Have a nice evening!