Monday, May 10, 2010

Super Bounce Monday

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From this weekends blog post 'So what do you do? Is a 10% correction it? Shorter term, yes we'll see a bounce, no doubt. Will it be sold into and then head lower? thing is for certain, investor confidence has been damaged. Just as the retail investor was beginning to feel comfortable with equities...BAM! Thursday afternoons meltdown hit. The problem is there are too many uncertainties and loose ends that need to be resolved and fixed. What would be bullish? An answer to what caused the computer glitch Thursday, FinReg passing, a Goldman Sachs settlement, the ECB needs to act before the contagion spreads. The ECB should resort to its “nuclear option” of intervening directly in the markets to purchase government bonds.If these events can happen, it would ease global uncertainty and rally markets. ' What a difference a weekend makes!

Thursday's 'Flash Crash' is most likely due to the absence of a uniform 'circut breaker' system..... SEC: Exchanges agree in principle to new rules >>Read

The Goldman Sachs situation~~ a possible middle ground is a “deferred prosecution agreement,” in which the firm avoids indictment is being discussed with the Justice Dept. >>Read

The news late Sunday on the ECB...appears it played out as Itz called, the 'Nuclear Option' or 'Shock & Awe', with a $1 trillion rescue for the euro that has halted market panic. >>Read

So with these recent events the markets rallied, but the bears are still out there growling and calling for this rally to be short lived. Itz believes that for now the market will conitnue to climb higher, because the fundamentals have changed. Yes, the Euro will most likely decline, but the contagion has been stopped. As for that $1 Trillion Euro Bailout, as with our TARP it doesn't mean it will be spent, just guaranteed. On Friday Itz suggested Ford (F) @ $11, closed today @ $12.15 up 10.45%, Itz also suggested buying Walter Energy (WLT) under $75, closing today @ $79.30 up 5.7%. Again this market should see further upside, however as always hedge yourself.

“There is only one side of the market and it is not the bull side or the bear side, but the right side.” - Edwin Lefevre

Discussing the EU rescue package and the jump in world markets with Jim McCaughan, CEO of Principal Global Investors, and Robert Doll, of BlackRock.

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