About Today's Rally

What a rally today - the biggest percentage gain in the last few days. I hope things are finally turning around. The fundamentals of the market seem to be changing, which could make this a real rally. Vikram Pandit's letter stating Citi is profitable is good news. I heard a ton of "professionals" (who have been nothing but wrong with predicting the market so far) saying that the numbers are skewed and write offs haven't been taken yet, blah blah etc... and that Citi is not doing well. In my eyes, the fact that Citi is actually making a profit, whether or not they still have to take write offs later on, is excellent news. Period. No excuses. Vikram Pandit is not a fool, he knows Citi shareholders have been disappointed and I don't think he is dumb enough to  come out with a statement like that unless he truly felt Citi's future is looking brighter. Maybe the worst of the banking industry's problems are behind them. 

Now, also announced today is the idea of modifying mark to market accounting rules and the reinstatement of the uptick rule. Both are excellent news for the financial sector. The uptick rule will stop bears from driving down stocks for no reason. And modifying the mark to market accounting rules is going to give banks a hell of a lot healthier asset base. There is a hearing on mark to marketing on Thursday which will be extremely important.

Next, AT&T announced it is hiring 3,000 workers. That is right, HIRING! I know they are planning to layoff something like 12,000 workers this year in their land line business, but the fact that they are hiring workers in other businesses is a bullish sign. Will unemployment finally slow down?

Tomorrow is going to be key. I wouldn't be surprised if we gave back some of the gains of today. That is to be expected as people are going to take profits after today's rally. However, if we don't drop too low, or stay flat, I think that is a bullish sign. I think we will have a rally on Thursday because of the mark to market hearing. Of course, we could see a huge drop and give back all  of today's gains and the bears will still be in control. We will have to wait and see, tomorrow is going to be very interesting and critical.

Also, a few days ago the president of the Richmond Fed Reserve, Jeff Lacker, told CNBC that people would be pleasantly surprised with the bank stress tests. I think this is a hint that investors are going to be surprised that banks are actually in better condition than everyone thinks. When the bank stress test results finally come out, it will be a fundamentally positive move in the market and I expect a rally from it.