They use the words soar to give you the feeling that the sky is the limit. I have been looking for this rally for the last 2 weeks. This is the rally that tells everyone that is OK to be in stocks. Over the past two weeks I have heard the experts saying that the worst is over and we may be bottoming. Now we get the rally in the market to validate those opinions. Read this:
Stocks Soar Over 2%; Ford Jumps
Stocks soared Monday as investors were encouraged by economic reports out of China and the U.S. and shrugged off the General Motors bankruptcy filing.
"I think that the crisis mode is over. We're not at the abyss," said Nadav Baum, managing director of investments at BPU Investment Management in Pittsburgh. "Now we've just got to deal with a recession. We know how to deal with a recession," he said.
Fueling the fire, the S&P 500 broke above its 200-day moving average, 928. Once it crossed over, there was no looking back and all three major indexes shot higher.
The Dow Jones Industrial Average jumped 221.11, or 2.6 percent, to close at 8,721.44. The S&P advanced 2.6 percent and the Nasdaq shot up 3.1 percent.
Major U.S. Indexes.DJIA8721.44221.11+2.6%1,668,830,000.NCOMP1652.216.09+0.37%0.SPX942.8723.73+2.58%5,173,902,400
"I think a lot of people feel like they missed the boat," Baum said, adding that the improvement in consumer confidence has also given investors confidence to wade back into stocks. "It's almost like the risk trade is unwinding," he said.
As expected, General Motors [GM 0.75 --- UNCH (0) ] filed for bankruptcy protection this morning as part of a plan that will see US taxpayers taking a 60 percent stake in the company.
Shares of GM gyrated wildly: They dropped below 50 cents in early trading, then surged to more than $1 amid short covering before falling back near Friday's close of 75 cents.
As expected, GM is going to get booted from the Dow, as is Citigroup [C 3.69 -0.03 (-0.81%) ]. They will be replaced by Cisco [CSCO 19.50 1.00 (+5.41%) ] and Travelers [TRV 41.91 1.25 (+3.07%) ].
The DJIA has been lagging because of GM and Citi. So they will fix that by adding CSCO and TRV to the Dow 30 and boot ourt GM and Citi. This is where they tell you everything is going to be OK. I think by October we will begin another crisis. The deflationary/Depressionary crisis. I would not trust a market that is in a long term downtrend where the experts say the worst is over. That is as bad as it gets.
I saw over the weekend that 90% of economists think we bottom later this year or early next year. My guess is that a bottom is so far off I can't even speculate a guess. Plus I have never seen this many economists be right, just look at what they said last year. This rally is a dead duck but I am still not short. You usually see price carry up as conditions deteriorate. I will give it more room before I short.
The beat goes on....Mikey
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