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MV Weather Report: Ray of Sunlight Blinds Bears

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

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After 6 straight down days, Turnaround Tuesday hit the bears on the chin. The market is right back where it opened on Monday.

Today the market rallied on news that the banks won't need nationalization. As per Ben Bernanke's speech on Capitol Hill, in which he said he didn't "see any reason to destroy the franchise value or to create the huge legal uncertainties of trying to formally nationalize a bank."

This statement sent the banks up and took the market with it. Bank of America (BAC), Citigroup (C), Wells Fargo (WFC) and JPMorgan (JPM) all made large moves.

I wouldn't be quick to pull on the bull hats - this isn't 1999. (Maybe it's just me, but isn't the bear market getting boring?) This was just a simple oversold rally. Today on the Buzz, Toddo said a move to S&P 800 may be the easy trade. If you were able to catch this rally, I'd look to take profits around Todd's target or sooner.

Risk still remains high; as Bennet Sedacca believes some banks may have trouble paying their preferreds.

"With the talk around about mark-to-market rules being modified, the preferred market has caught fire in the bank space. Names like Bank of America, Citigroup, etc. have turned 10-25% in a couple of hours.

"Then again, they are still down 75-80% from par. I stick by my idea that they will not be paying by mid-year."


Whenever a rally is sparked, investors come out of the woodwork with different buy lists. Here's today's buzz from Dave Dispennette:

"Questcor Pharmaceutical (QCOR) develops prescription drugs for the treatment of diseases and disorders of the central nervous system. I've been involved with this stock for almost a year, but I've bought the March $5 Calls for $2.10 today as a way to trade the stock into earnings tonight.

"Catalyst Health Solutions (CHSI) and EPIQ Systems (EPIQ) are 2 other option plays I jumped into today for earnings tonight. Kendle International (KNDL), Balchem (BCPC) and Synovis Life Tech (SYNO) also look good to me into earnings tonight and tomorrow morning, but I haven't established a position yet."


All those names are small caps, and may not be for everyone. For those who like to trade larger, more well-known companies, readers may consider some of the names Toddo was trading today: Dryships (DRYS), Yahoo (YHOO), Lowe's (LOW), Intel (INTC), Research in Motion (RIMM) and the USO.

Not much on deck tomorrow - but heads up on Existing Home Sales at 10 a.m.

Have a great night, Minyans!

Position in RIMM, SSO

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