What is your take on the huge market jump today ??

Concensus anxiety

Several days ago Sears and Home Depot (I think) issued sales warnings, saying that same stores sales comps would be negative. This info was taken as very bad news for for all retail businesses by the market.

Keep in mind that investors have been expecting retail sales to get worse because of higher interest rates and high gas prices.

Then last Thurs. morning, Walmart and Target reported actual results that were OK. Not great, but OK; and the market breathed a sigh of relief. This drove the market higher throughout most of the day until the DOW average was up about 150 points in the afternoon.

Then something magical happened. Hedge funds had many billions of dollars that were short the S&P500, financial stocks and small cap stocks; and they were losing money hand over fist during this market surge. By mid-afternoon they paniced and started covering their shorts; that is they started buying like crazy in order to stop the bleeding.

This sent the DOW aver. up a total of 282 by the close. On Friday an analyst from Merrill Lynch said that the hedge fund community is still massively short the market in those areas I mentioned above. She said that it could take weeks for these funds to unwind or cover all of their short positions if they felt they needed to do so.

Also keep in mind that over the last year or two US companies have engaged in huge stock buy-back programs. Also, there have been many mergers and acquisitions. These two factors have reduced the total number of shares available to the markets by a large amount; maybe 10 to 20 percent.

My take? Don't bet on it. (more than 400 points in 2 days, how reliable is that?)

http://www.mastersoequity.com/

http://www.optiontradingpedia.com/

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Good retail sale data... But no, nothing out of the ordinary...

A diversionary tactic to take the public attention away from the political scene.

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