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A rally like todays was expected and also suggested as a possibility in yesterday’s last paragraph. Let’s face it; markets were oversold and ripe for some kind of bounce, large or small. And today’s rally was supersized.

Two of the three problems facing markets got some help today as oil prices continued to fall and there was a “shred” of good news from Wells Fargo. That was enough to stampede the herd.

Inside the numbers conditions were good although I thought NYSE volume moderate considering the day. Anyway it appears NASDAQ breadth was strong enough to qualify for a 90/10 day when 90% of stocks advance along with 90% of volume. But, I’m not confident in Yahoo’s data so I’m posting it and that from the WSJ.











































































































I’ve issued many warnings about a reversal day like this coming for the past two weeks. Today hurt shorts badly but it hasn’t altered the bear market status of the overall market. And, we could have a few more days like this. The government most likely intervened in financial sectors today buying FRE and FNM as they indicated they would. So the PPT lives.

It shouldn’t surprise anyone demand destruction in commodity sectors is a possibility given anemic economic conditions. OPEC officials yesterday stated demand for oil would decline this year due to poor economic conditions. If Iran wants higher oil prices then they’ll launch a few more missiles or get their proxies in Nigeria to stir up more trouble.

However, the CPI, bogus number that it is, coupled with poor economic conditions should give everyone the willies. It means stagflation and that’s not good.

With the CPI now including “owner’s equivalent rent” as a major component, and that trend rising, perhaps the government will now want to revert to the previous model that included home prices now that they’re falling. Ok, let’s not give them any ideas.

Let me leave you with a simple question: “Do you think members of congress actually know why the Federal Reserve Board was created and what they actually do?”

Have a pleasant evening.

Disclaimer: Among other issues the ETF Digest maintains long or short positions in: SPY, SDS, MZZ, IWM, TWM, QQQQ, QLD, XLI, SIJ, XLY, SCC, IYR, SRS, GLD, DBP, DBA, DAG, EFA, EFU, EEM, EEV, EWZ, RSX, FXI and FXP.