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Minyanville's T3 Daily Recap: Market Stages Furious Rally Into Close After European Bank Reassurance


Just when doom and gloom started to reach a fever pitch this afternoon, the market turned on a dime and it looks like a short-term bottom may be in.

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Stocks staged a mind-boggling bounce into the close Tuesday, with the S&P rallying nearly 45 points in the final hour of trading to finish 2.3% higher. The Nasdaq was even stronger, finishing the day up 3% after the late push. The market opened lower this morning after breaking through August lows (1101 in the S&P) yesterday. Stocks were able to find footing after more early selling, but the morning rally was faded after lunch. The market continued to fade, in part due to disappointment over Apple's (AAPL) announcement, until the last hour when huge buying volume entered the picture.

The catalyst for the bounce was a Financial Times article reporting that European finance ministers are looking into a coordinated plan to recapitalize financial institutions when necessary. Nothing definitive is in place yet, but Olli Rehn, Europe's commissioner for economic affairs, was quoted as saying, "There is an increasingly shared view that we need a concerted, coordinated approach in Europe. There is a sense of urgency among ministers that we need to move on." Bank stocks, naturally, bounced strongly on the news.

Fed Chairman Ben Bernanke also testified in front of Congress this afternoon, reiterating that the Fed will consider all of its policy tools to meet its dual mandate. Receding inflation expectations and a stronger dollar are making the possibility of further monetary easing more feasible.

Recent selling had largely been the byproduct of a seemingly growing reluctance by Eurozone finance ministers to provide another big bailout for Greece while the troubled country was falling short of deficit reduction targets. Just when doom and gloom started to reach a fever pitch this afternoon, the market turned on a dime and it looks like a short-term bottom may be in.'s Scott Redler left at around 1:00 pm ET to make an appearance on CNBC while long AAPL, Las Vegas Sands (LVS), Morgan Stanley (MS), and SPY, but his stops were hit before the monster rally late in the day. "I feel like a [retail] investor," he said, "I put stops in when I left and they stole all my stock!" Redler covered the majority of his shorts when his target of 1070 in the S&P was reached, and believes today was a reversal "day to take notice" that should lead to another bounce.

Apple Store

The wild gyrations in the market were almost notable enough to overshadow Apple's big announcement, where they promised to "talk iPhone". The company unveiled new features and pricing structures for its line-up of iPods, but the big news was in regards to the mobile handset that changed the game. Most were anticipating the iPhone 5, complete with a new sleek design and guts. However, the market showed disappointment when new CEO Tim Cook only unveiled the significantly improved iPhone 4GS.

Apple continued its trend of "buy the rumor, sell the news" on major announcements. More often than not with AAPL, hype exceeds reality. However, if consumers aren't impressed with the new iPhone 4GS, then they are extremely superficial. Although it maintained the same design as its sister model, the new device represents a major technology upgrade. Let's just say the iPhone 4GS may not have been the sexiest release, but it has a great personality. And I mean that in a good way.

The phone includes new CPU and graphics, making it seven times as fast for games and twice as fast on normal tasks. As rumored, the phone also runs on faster HSPA+ networks, again making download speeds two times faster than the 4G model. The new camera is sensational, upgraded from 5 to 8 megapixels, and also includes 1080p HD video.

Perhaps the most exciting part of the new iPhone was the introduction of Siri, the smart assistant that responds to a wide range of voice commands. Siri can do anything, from playing music to searching Wikipedia to reading you messages from your pocket. The demonstration was brilliant, and illustrated the fact that Siri is more than just a robot, she responds to natural language and complex commands.

The market apparently wanted an iPhone 5 however, and AAPL was off by more than 5% before joining in on the furious rally into the close. It finished the day down only 0.5%

The market has begun to give back some of those late-day gains after the bell, but Europe's reaction to this afternoon's news will be the determining factor in tomorrow's open. Today looked like a textbook reversal day, and for now the aggressive short trade is off the table. What a difference an hour makes. Look for the possibility of another strong short squeeze bounce.

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