After watching horrible earnings results last night and this morning it was logical to think we’d be plunging back into the bear abyss. But no! Oil prices fell sharply again as many worried that poor economic conditions would hurt demand. That’s the good news since bulls believe that will get Chucky the Consumer shopping again. It’s also the bad news since, well, the economy sucks.

So stocks turned around and rallied sharply with the thinking being that miserable earnings are just so much “old news” and looking ahead things will be better.

Let’s also call this market for what it is: a trading affair dominated by professionals whether from trading desks, hedge funds, SWFs and abetted by more cash from the Fed. Today the Fed tossed in another $20 billion to primary dealers for 28 days for lending trading.



The chart of the day belongs to Wachovia Bank which posted nearly $9 billion in write-downs and missed earnings by a country mile. Yet, after opening sharply lower “logically”, the stock rallies nearly 30%! What kind of a message is this for management?



There has been plenty of negative news regarding shorting--with most of it coming from bulls and officialdom naturally. They claim bears cheer bad news and should be stopped. If so you’ll have to explain why firing 10K employees at Wachovia Bank is a good thing which evidently it is.

Then there’s this little matter of what we’ll call MTSCNA [Modified, Transmogrified, Special Circumstance Non-GAAP/Ex-Item accounting]. It seems banks are coming up with new methods to push some non-performing loans into the future by extending their delinquency periods and creatively structuring [see Bank of America/Countrywide] acquisitions. This makes things seem better than they are.

WM [Washington Mutual] reported horrible results after the close and the stock was up 7% as this is being written in after hours trading. They may just as well tell investors they’re going bankrupt! Way to go!!!

Okay, so I’m annoyed with all these games. Let’s move on.

Volume was heavy at the opening and then toward the close as shorts were squeezed once again. Breadth was excellent and I’m posting the Yahoo/Finance data before they screw it up.