Stock Markets Finally Rally

Today we saw a wild day with the Stock Markets rallying in a huge effect probably from the leaked report from Chief Executive, Vikram Pandit who said that Citigroup had a good start to 2009, and was actually in profit in the first 2 months. Apparently this is the best quarter since 2007, and this gave confidence to investors, and investors are believing that the situation is not as bad as it looks, and a recovery is imminent. I believe that this is a false rally, and it will be rectified in the coming few days, and this is normal when you have trends riding at very low levels.

Wall Street rose from 6523 to 6894, an increase of 371 pips. The S&P500 also rose from 674.92 to 717.58 which was an increase of 42.66 pips. The FTSE 100 also dramatically increased as well from 3483 to 3720, which was an increase of 237 pips.

It is hard to see this being a long term movement or the economy recovering, to me it seems a like a short lived rally. Investors are believing that the other banks are not as deep in trouble as they once thought, and there is a future for us, and the economy will recover. Its hard to predict what losses other banks have, and today the majority of banks like Barclays rose considerably in value so its really a 100 billion dollar question.

I personally believe that we will see this rally corrected over the next few days as I dont believe it can continue. The Stock Markets have risen too quickly and this trend will be reversed, the only question is when. Tomorrow will be another interesting day to see what actually does happen. This is why trading with trends, just like our LS Trader system works. Today, you would have picked up the trend from the early hours of the morning, and if you were a day trader, you could have followed that trend all the way to the top.

Kind Regards

Robert Stewart