A very strong day in the markets today as the major indexes moved 6 to 7 percent. I just read that the S&P is up 23.4% in 11 trading sessions (thanks Mark). That is the snap-back rally that I've been looking for in the past month. The market liked the fact that Geithner and Co. finally showed something resembling a plan. The market is so starved for good news that it will now settle for bad news spun as good news.
This puts investors in a dangerous spot though. Obviously the average investor isn't taking part in this rally. Its all speculators and hedge fund traders with computer trading programs. We are literally building a house with no foundation, and just like a house built that way, this rally could collapse at any time. Bottoming is a process. Maybe it has happened, maybe it hasn't. But I can't fully endorse buying stocks until I see more economic data, and some sign of stability from Washington.
Right now those in charge seem content to borrow more just to escape this mess "on paper." This makes me a bit worried.
So, the call to buy into the market in a small position was a good one, so it seems. I still wouldn't head in full steam. This rally may carry on for some time, especially if there isn't a lot of new news which shocks the market. We'll see what tomorrow brings.