Posted by Jack
Wall Street was showing signs of confusion in early trading and investors were up and down in the same hour, but suddenly somebody figured out there were a lot of bargain stocks in the financial sector (duh). I’ve been saying that… and the market rose 410 points; many of the stocks that went up 12% or more were in that sector! Financial stocks went wild. What a come back from the huge sell-off days! Absolutely unbelievable.
When the market begins to gyrate wildly, as it has been doing in the last few days, it is usually a signal the market is close to the bottom. However, one good day does not a recovery make, nor even a bottom! But, I believe I can safely say this is a real good sign we are witnessing the “beginning of the end” of one of the worse financial markets we’ve ever seen.
A report that Treasury Secretary Henry Paulson is considering the formation of an entity like the Resolution Trust Corp. that was set up during the savings and loan crisis of the late 1980s and early 1990s left investors jubullient. Investors hoped a huge federal intervention could help financial institutions jettison bad mortgage debt and stop the drain on capital that has already taken down companies including Bear Stearns Cos. and Lehman Brothers Holdings Inc.