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MV Weather Report: Citi, Bernanke Sweep Clouds Away


Rain or shine, we review the day's biggest stock stories.


What a day it was for the market. Turnaround Tuesday definitely lived up to the hype.

Citigroup (C) came out and said they had 2 profitable quarters through the first 3 months of this year; all the bank stocks subsequently shot higher. This is very positive news: If Citi is making money in this environment, that's a big positive for the banking sector as a whole.

Later, Ben Bernanke gave a speech about the valuation of illiquid assets, which was also taken as a positive on the Street. Here are some bullet points from the speech, with Todd's comments:

  • "The Fed needs to buttress protection for money market funds (this is huge from a "social order" perspective).

  • "He urges authority to take over the biggest financial firms (read: nationalization, temporary or otherwise).

  • "Fed should play some role in broader risk management (HELLO McFly!--Where was this proactive initiative when the writing was on the wall?)

  • "Fed will seek legislation 'on its own account'' (help me here--does this mean they, themselves, will push for legislation or they want legislation to enable 'its own account,' namely Fed bonds).

  • "And finally, and perhaps most importantly, he said he wouldn't support suspending mark-to-market."

Finally, once the tape looked to be getting exhausted. Reuters broke a story saying that the SEC would consider reinstating the uptick rule. Bulls cheered the news, and a bear-market rally was underway.

I'm starting to hear a lot of bottom-calling out there. But is the bottom truly in? It's most likely too early to tell; chances are, today was nothing more than an oversold bear market rally. Bears get greedy too. Here's what Bennett Sedacca and his firm are doing.

"Since starting buying on Thursday, my firm has gone to a fully invested position in equities since our last foray around the November lows.

A couple of interesting anecdotes that will keep me invested (renting anyways..) for the time being:

  • Every individual investor I know is asking me if they should sell.

  • Every professional investor I know is asking me when I am selling.

  • The 'Stock Only' A/D line on the NYSE AND Naz has stayed in the +1500-1600 range --very bullish.

  • Credit is improving.

  • Reactions to bad news, like United Technology (UTX), is bullish.

My firm's positions are now IVW, IWW, SMH, EEM, XLF, EWJ and even a few GECC hybrids and preferreds thrown in for good measure.

Only time will tell if we're right, but the market feels pretty good to me in here. For now. I still think we'll see lower lows in 2010."

Not much on the radar tomorrow, Minyans. Have a great night!

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No positions in stocks mentioned.

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