Trader Talk

Market Rally: Trustworthy Or Not?

So what matters here is the answer to one question: can we trust a rally? We haven't been able to so far; you can bet some money will try sell into it, as they have for months.

So skepticism is in order. Bulls argue that after events on the weekend, when the fed acted aggressively to help sell Bear Stearns and stabilize the markets, there's a greater sense of confidence that the Fed is getting creative in trying to deal with this credit crises. There's also a double bottom on the major indices, which soothes the nerves of technicians.

The biggest help short term will likely be the quadruple witching expiration tomorrow; the Street has been net short the market for months and the remains a lot of trapped shorts in the market. This is part of the reason we are seeing this morning's sharp 15-point rally in the futures, which occurred in the forty minutes.

The other major factor is Fannie Mae and Freddie Mac , which have won the capital reliefthat will allow them to buy more mortgages. VISAsuccessfully pricing the largest U.S. IPO in history is also helping.

Questions?  Comments?