Investors have finally decided that stocks are oversold, and we've seen a strong rally the past two days. I'm still not convinced things have improved in the financial sector, specifically at Citigroup (C), but the stock price is pretty cheap. I believe they took the finance deal to prevent cutting their dividend, which would have been disastrous from a psychological standpoint. I think in the long run, they would have been better without taking this deal, but investors are following headlines, and this works for them.
Outside of that, the lowering of crude oil has to have helped some.
We've also got some Fed commentary, which always moves markets. Although yesterday, it was said that they don't want to cut rates because of inflationary pressures, today we heard that they need to be flexible. Its funny what the market chooses to listen to and what to ignore. I think it means that at least they are having a healthy debate and might not be as influenced by outside political forces as I thought they may be.
Just about everything is working today. We've stayed away from financials, and they are leading the way today. I'm not calling a bottom in banks though. I think there will be further shakeup over the next couple of quarters. But the correction did give the opportunity to buy at reasonable prices.
Have a great day!