Monday, October 13, 2008

This was the biggest one day gain ever by the Dow. 29 of the 30 Dow stocks were up except for GE--which speaks volumes about the sustainability of this rally. It seems clear to me that GE is now being used as the institutional money fund yielding close to 6%. Money comes out of GE and into other stocks, then back to GE when the rally fizzles. In other words there is no new money coming into the market, existing money is just being redistributed seeking higher short term trading returns. This rally can have legs, days, weeks or a couple of months until prices move to a level of important resistance and the sellers come out of the woodwork again. Enjoy today. For those nimble enough to trade this rally promise yourselves that you will not give back any of those hard to come by gains, if and when the market has another leg down.