Futures popped right after the close as Google reported strong numbers; up 10 percent.
Major indices stable today, despite mixed earnings report. IBM , good, Marriott , ok on strong international sales, but Conway ,Nokia and Pfizer were notable disappointments.
Dow, S&P are now approaching 3-month highs.
What's up with the brokers? Really closing strong here: Lehman up 5 percent, Merrill up 5 percent,Morgan Stanley and Goldman up 2-3 percent.
Seems like a lot of short covering, but the theory is...what? Earnings out, brokers unlikely to get worse? Well, sort of. As one trader in financials noted to me, "earnings have to be real bad, not just in line" to keep short positions on.
That's true, but the case for getting bullish is broader than that. Simply put, here's out the bulls are explaining it to me:
1) The write downs mean anything anymore, the story is old, the numbers are meaningless.
2) Probably one or two more rounds of it but the sentiment doesnt really change that much.
3) They are historically cheap, they have survived the meltdown and had no problems raising outside capital.
The downside to this game, as others have noted, is that if the quarter progresses and business is not getting any better, shorts will go right back on again.
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