Today's Markets

Today was a banner day for the stock market. After the worst January in History, and the worst February since 1931, the major averages had their best day since a couple of big rebound days last fall. The Dow gained 379.44(5.80%), while the Nasdaq gained 89.68(7.07%), and the S&P gained 43.07(6.37%). This constitutes the first rally attempt of the Obama Bear Market.

These numbers are very impressive; however, their significance, or lack thereof, will be revealed in the next few days of trading. Do we have a new bull market at hand? A strong counter-trend rally? A dud? A big rally on high volume Friday or next Monday would be an excellent sign. Contrary-wise, a failure to see such a rally in the next week will bode ill. In any case, today's action is the type which typically signals a new rally - it just doesn't guarantee one.

Two major factors have been cited for the rally. First, a news item that Citibank was profitable for the first two months of the year buoyed confidence that there is hope in the financial sector. Second, but perhaps more importantly, the criminal Barney Frank indicated that his House committee would revisit the uptick rule. The suspension of this rule, which formerly prevented short sellers from taking a position on a "down tick", has been cited innumerable times by the likes of Jim Cramer, Larry Kudlow, Steve Forbes, and others as a major factor in the market's crash. I absolutely adhere to this school of thought, and in fact believe that it worked in diabolical combination with FASB 157 ("mark-to-market") to annihilate financial stocks.

I also think a third factor was at work as well. Last week, I opined in the midst of the insanity coming out of the Shakedown administration, and the accompanying market meltdown, that the spark for a new rally would come from a congressional defeat visited upon the administration vis-a-vis its budget, or some other major agenda item (card check?). I think something akin to this was at work today. Over the weekend, and continuing today, we have seen a number of big names who voted for Obama question his priorities. In fact, it would not be an exaggeration to say that at least some of these people expressed buyer's remorse. On Monday, Warren Buffet, a notorious rich Democrat, in so many words said this guy's priorities are all screwed up. Last week Jim Cramer called Mugabe administration policy "insane". Over the weekend, several liberal pundits evidently felt safe to come out of the closet on the administration's flat earth economic policy.

I think the market, in addition to factors one and two above, was buoyed by the notion that there are just enough sane democrats, in office and/or in punditry, to put a check on President Shakedown's efforts to take down the economy. Watch how these atmospherics progress as you watch the markets. Perhaps, to the extent the Mugabe administration is forced to retreat, we will see a market rally. Watch especially for word from Washington concerning FASB 157 - Steve Forbes said over the weekend that the Dow would rally 3000 points in a month if FASB 157 was junked, and the uptick rule reinstated. Beyond that, I don't think there's a great deal of potential in this market, because the campus radicals still dominate D.C. And remember, the averages still have a little ways to go just to climb back to what only recently were considered rock bottom support levels. Let's all take a look at this post at the end of the month and see how things turned out.