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Bank stocks surged today on the Obama administration’s “bad-bank” plan, which could absorb some banks’ most toxic assets. The current thinking is that the FDIC would manage this entity. The goal, of course, is to try to get banks to start lending again, which the first round of the “TARP” bailout money failed to do. Stocks like BAC, WFG, C, and DB rose sharply, leading the broader market higher. The Fed’s decision to leave rates unchanged, while expected, was the cause for more bullishness in the afternoon. The CBOE VIX volatility index moved lower, and stayed just above 40% for most of the day. Crude oil dropped on the weekly status report that showed an increase in crude inventories, but it rebounded for the rest of the day as optimism in stocks grew.
The short-term strength of the market is giving it another bounce off the lows of last week, suggesting that maybe, just maybe, it will retest the highs it made at the beginning of the year. That would be helpful to a lot of contestants who have loyally hung on to long stock positions. Of course, there are plenty of you have enjoyed success on the selloffs with the inverse EFTs. Good vs Evil? nah...If everyone agreed on everything, there wouldn’t be any trading.
Tom Preston
thinkorswim, Inc.
Member FINRA/SIPC/NFA
thinkorswim, Inc. and its registered employee, Tom Preston, do not solicit or recommend any form of trading in the individual stocks (or their derivatives) mentioned above. Please do careful, independent research before investing any money as well as weigh the possible consequences on your particular financial situation before doing so. The risk of loss may be substantial.
