my guess would be we're up - but we'll see about that! after yesterday’s massive losses, the market was able to regain a big chunk of the ground it lost as a decent sized gap higher at the open was followed by some steady progress to the upside in the afternoon. there is a struggle between those who wanted to get back in front of an expected rally once a revised bailout bill is passed later this week and investors who were badly shaken by yesterday’s rout. after holding early gains, and we saw some buying later in the day.
several factors - talks of an ECB cut and a slight easing in measure of credit market turmoil, and some good old-fashioned reflexive buying – certainly helped, but the biggest driver, i think, behind today’s strength was hoped-for revision of mark to market accounting rules, higher fdic insurance and the hope that Congress will pass the Paulson package.
Regardless, the thing that we need to remember is that huge drops like the one we had yesterday are typically followed by vigorous rebounds. That makes for some quick trades, but that is by no means indicative of a lasting turn. We’ll see if this is the beginning of a bottoming process, but even if it is, it’s going to take a while for that to develop.
These are not technical conditions we can trust, but chances are that this action, while it could very well go for a bit longer, will only be met once again by shorts eager to press once again and trapped longs to make their escape.