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"Fix banks first, growth will follow"
"The recession could end late in the year"
By Dr. John L. Faessel
ON THE MARKET
Commentary and Insights
Dr.Faessel@onthemar.com
Friday - 2/25/2009
"If there is one message that I'd like to leave you with, if we're going to have a strong recovery, it has got to be on the back of a stabilization of the financial system. It is black and white," Fed chief Bernanke told the Senate Banking Committee. He also said, "The recession could end late in the year — if massive policy efforts stabilize financial markets."
The TICK flew to a plus 1588 its highest posting in month’s right after Bernanke spoke on the nationalization issue as the stock market took wings. Volume rose and was above average. The New York Stock Exchange composite was up 4.1% and the S&P 500 (SPX) 4%.
Extreme levels of sentiment and oversold indicators had set the stage for a mighty rally. The Bank index (BKX) reversed higher yesterday and was up 13.59% suggesting that there will be no nationalization of the major banks. Let’s remember that housing stocks turned down over two and a half years ago and the bank stocks began their downward trek about two years ago. A bottom in these sectors has to occur for the market to heal, much as Bernanke said.
I'm a believer that this rally will extend after some initial back and fill. S&P futures before the open are off about 3 points. I like the fact that we headed down open; my experience tells me that’s a good thing after such a hot run as we had yesterday. Obama’s speech last night re-emphasized much of the spending issues that he had spoke to in his campaign. He also spoke of some spending cuts that I personally have no faith will ever occur. How the market will eventually digest these new trillions of spending and how and where it will all come from is yet to be determined. What I heard last night made “a chicken in every pot” seem inconsequential. I heard European Socialism and spending, spending, spending!
Yesterday the McClellan Oscillator (favorite overbought / oversold indictor), posted a minus 196 after Monday’s minus and deeply oversold 366. The CBOE Total Exchange Volume Put / Call Ratio was 0.79. The (VIX) (FEAR INDEX) closed at 45..
Dr. John L. Faessel: Dr.Faessel@onthemar.com
Published at Investorideas.com Financial Article Feed : http://www.investorideas.com/RSS/feeds/II-Art.xml
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