Wed, 10/5/11 4:27 PM – Market Adds to Gains

Stocks continued the sharp rally from yesterday’s last 45 minutes to rise between 1.2% and 1.8%, depending on the index. Techs and banks led the advance. Gold was up 1.1%, bonds were up and the dollar was down.

This continuation today is a pretty good sign. Of course, we have seen a number of rallies the last couple months that only lasted 2-4 days and we are at a resistance level. Earnings reports start coming out next week and may be disappointing, especially future guidance. But the market’s closing close to the highs today is a good sign.

The fact that pessimism is so strong and widespread right now is also a good thing, as is the news that European leaders are realizing they need to recapitalize many banks, something they have been very slow to accept. Whether there is enough money is open to question, especially if Greek bondholders are forced to take a bigger haircut than was negotiated in July. I am inclined to be patient since we already have money in stocks. I’m not ready to increase it much, yet.

Leave a Reply

Your email address will not be published. Required fields are marked *