Oversold Market Helps Move Stocks Up (Alcoa Looks Good)

Stocks moved up late in the day. Some of this is clearly due to the oversold nature of the market. For example, regional banks were particularly strong: Washington Mutual, Comerica, Huntington Bancshares,Fifth Third,Regions Financial, and Sovereign--the most beaten-up names--were up double-digits today.

Some traders are also turning bullish. John Mendelson of the Stanford Group issued a buy signal late in the day; traders tell me it was his 3rd buy signal in 5 years, and the prior two calls were very good. This report went out about 2:45 ET. Here is what he said: "I think the long correction in the stock market than began early last summer when the NYSE Advance/Decline Line topped out is ending and I look for a resumption of the advance that began in October 2002."

He lists 8 reasons supporting his hypothesis, including 1) reduction in the risk premium for banks, 2) the New Low list declining, 3) the Dow Transports holding well above its January low, 4) rising put/call ratios.

Drug stocks have moved up: Pfizer highest in a month, Abbotthighest since February, Wyeth highest for the year.

Transports up as commodities weakened. As for big cap financials, the best that can be said is that they have stopped going down. For the past few days. That's all I'm saying.

Update: Alcoalooking good here--$0.66, estimate was $0.64, compared with $0.37 last year for the same quarter. The key line: "Higher input costs impacting the entire aluminum industry were offset by higher volume and stronger pricing." Up 4 percent in after-hours trading.

UPDATE: The sentence about Alcoa should have said the company made $0.81 instead of $0.37 for the same quarter last year.

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