Market Rally: Will it continue this week?

That is the big question at the end of today's trading. The Dow went up 379 points to close at 6,926. The S&P 500 went up 43 points top close at 719. This is was especially good as many had seen the S&P needed to get up over 700 again. The key level for the S&P this week would be to go over 740, as many shorts would get rid of their shorts very quickly. They haven't been nervous in a while. The ETF Ultra Short triple play, TZA lost over 20% today, while another ETF triple play of the Small Caps, symbol TNA, gained over 20%.

The Volume was very good and a number of stocks went back above their 20 and 40 day moving averages all in one day. I think the rally will continue just because it has been long awaited and many do not want to sell into it until they have gotten back some of their losses. I would not sell into this rally too soon. The Dow could go all the way above not just 7,000 but 8,000 as well.

Gold dropped again today, down 22 points closing below $900 to finish at $896. This is very bullish for stocks. I also have noticed an increase in trucks on the highways the past 2-3 weeks here in the Bay area. This has been a good sign although the sample size is quite small and not representative of the economy in general. But it was a hopeful sign. I will be traveling to Las Vegas tomorrow and I will see first hand how Vegas is fairing. I expect to see some there watching the NCAA March Madness basketball tournament on the jumbo screens.

Rep. Barney Frank today said he believes the SEC along with Congress would reinstitute the Uptick rule. And Fed Chairman Bernanke today said he believed the recession would be over in the second half of 2009.

All in all it was a terrific day to help my portfolio and I expect it to continue. Don't be disheartened if it drops during some time tomorrow. This rally has legs and I do not believe you will be disappointed!

Market Outlook for Feb. 26, 2009

The market has been in a very tight range of late. The VIX currently is at 44.67 and has retreated from the over 50 readings of 2 and 3 days ago. Volume the past 3 days has been higher than normal and the Put to Call ratio has abated down to 0.84 from highs in the 1.20 and higher intraday peaks of the past few days. The fact that we are still holding is encouraging. Also Fed Chairman Bernanke has also stated in testimony before Congress that they might reinstitute the Uptick rule for Shorting stocks which previous SEC Chairman had ended the rule taking the wrath of many investors like myself who called for his head.

I continue to believe we are not heading lower in the Dow and S&P 500 Indexes but my belief has been tested as well. I continue to hold TNA and SSO, AAPL, F and other favorites. It was good to see Ford climb back up over $2.00 the past few days. It had been as low as $1.67 the past few days so it is a nice recovery.

If I had available cash to invest I would wait to see if we can hold these levels before committing more cash to stocks. I still am hopeful we will finish the week neutral to positive.

It's time for all to focus on SEC Chairman Christopher Cox!

Back on November 23rd, I wrote that we need the SEC to reinstate the "Uptick Rule" to prevent those who short the market and stocks to do so at this time which will exacerbate the problems. It is in part why Citigroup stock fell so sharply and why it was bailed out a week or so ago. The quote back then was, "One of the reasons Citi finds itself in this situation is the loss in their stock value at $3.94. One thing which would help is if the SEC re-instituted its Uptick rule to prevent continued shorting of the stock by speculators. It was the worst decision in SEC recent history to abandon the rule. Many have called for the head of Christopher Cox, head of the SEC and a Bush appointment. It seems too late for that but Cox could reinstitute the Uptick rule and help minimize a further slide in the share price. I just don't have any confidence in him doing that. It would be admitting he made a mistake and that is something the Bush Administration will not consider."

Well it is time for all to put the light back on SEC Chairman Cox, because what he is doing by not re-instituting the Uptick Rule is to give favored interest (he worked for the international law firm of Latham and Watkins) where the law firm defended many Hedge Fund cronies. The Hedge Funds are getting their payback and favored interest, as long as the Uptick Rule has been made void. Hedge Funds are not regulated and they like it that way and use firms like Latham and Watkins to help keep it that way. So let's all write to our Congressional leaders and local newspapers calling for Cox's head and possible indictment. He was appointed by President Bush and is in his final days in this Administration but one could argue what he has done is criminal and minimally requires more investigations by Congress.

You see my friends these people can take the markets down further below to 7,000 at any moment and they will clean up with your Retirement accounts going lower in value. This rule needs to be put back in play as soon as possible. Wake up to Chairman Cox and do some research on his background and see who are his special interest buddies. He most likely will return to work for this Hedge Fund firm in 60 days. Putting him in as SEC Chairman was like putting the fox in charge of the hen house or putting Chemical company management, Mining executives and other toxic producers in charge of the EPA.

THe financial crisis slowly plods along. We're lucky it is giving experts time to think about solutions!

Main Street media is reporting that the government is considering a bailout of Citigroup. Citigroup also has already received a $25 Billion package from the TARP funds, so many wonder what Treasury is now considering as its options. Citi lost its bid for Wachovia to Wells Fargo. While at the same time the Administration and those of the Obama Administration are trying to calm and stabilize markets here and abroad. All this while many are ambivalent about a bailout of the Auto Industry and specifically GM. This is leading to our friends abroad in Europe and Asia wondering whether the U.S. is going to have an unfair advantage over rivals, many of which are made in those regions.

They will not let Citigroup fail. So right now it's all about speculation. One of the reasons Citi finds itself in this situation is the loss in their stock value at $3.94. One thing which would help is if the SEC re-instituted its Uptick rule to prevent continued shorting of the stock by speculators. It was the worst decision in SEC recent history to abandon the rule. Many have called for the head of Christopher Cox, head of the SEC and a Bush appointment. It seems too late for that but Cox could reinstitute the Uptick rule and help minimize a further slide in the share price. I just don't have any confidence in him doing that. It would be admitting he made a mistake and that is something the Bush Administration will not consider.

But in spite of it all, I believe this week ahead will be good for the markets. I'll state why tomorrow. Come back then.