Mission Accomplished! Market Stages Late Day Rebound

If you read my blog yesterday, you would have seen that I said we would have a rebound today.  As I pointed out in my post,  Tuesdays have behaved rather well for long-only investors.  Unfortunately it appears to be short-lived as Wednesday has played out to be the worst trading day of the week.  We shall see how it plays out.

With all of that said, I think we buck that trend tomorrow.  I see us setting a base to move higher as we reach the "holiday effect" part of the year.  I am a believer in the "holiday effect" - investors usually bid up prices because the holiday season brings a renewed sense of optimism.  

Other notes from today's trading session:

1) Rumor 1 - TD Bank and PNC Financial may be getting ready to announce a secondary equity offering.  Current holders of these name should beware.  EPS dilution may be on the horizon.  The official announcement of a secondary offering will almost be certainly followed by a decrease of 7-10% in the equity price.

2) Rumor 2 -  Famed hedge fund manager-turned-Sears CEO Edward Lampert is is said to be exiting large positions due to the poor performance in his hedge fund.  Only 24 months ago, "Fast Eddie" was proclaimed as the next Warren Buffet.  Don't get me wrong...I still think Eddie is a superstar but building a legacy that closely resembles that of the "Oracle from Omaha" may be a bit much. Besides, have you been to a Sears lately?  Its like being in a cemetery.

3) Signs that we are close to the bottom can come in many different sizes and shapes.

a. Unusual "market commentators" make reference to the poor economic condition:

[ESPN] ANN ARBOR, Mich. -- Rich Rodriguez loves to win -- and he hates to lose as much as anyone.  Michagan's coach, though, tries to keep as much perspective as he can.  Rodriguez has his wife and kids around him after practices, at the team hotel and on bus trips to the stadium. His office door is always wide open, allowing visitors to say hello.

Heading into his first Michigan-Ohio State game -- where the Wolverines are expected to extend their dubious record with a ninth loss -- he tried to deliver a message to fans who have lost touch.  

"It's amazing some of the things that people would say [on a message board] or yell at you of a personal nature," Rodriguez said Monday. "You almost want to tell them, 'Get a life.'  

"There's a whole lot bigger problems. Look at the economy." 

   

b. New investment instruments begin to hit the market and the sheep begin to chase the "new" thing that serves as the alternative to equities: 

[EMII.COM]Russian investment firm Alfa Capital will start a fund for its high net worth clientele investing solely in diamonds, Wealth Bulletin reports.

The proposed fund is part of an expanded line of products for Alfa's wealthy clients, including investment vehicles dedicated to art collectibles, vintage wine and fashion.

The firm is expected to launch the diamond fund in the spring of 2009. The fund, which will have minimum investment of €1 million, will invest in securities of Russian and foreign diamond mining companies. The estimated yield of the fund would be 15-17%.

Thats about it for tonight.  As I mentioned in previous posts, I will try to do a better job posting my thoughts on the blog.  Good night and good luck from Dallas!  And always remember: The bulls will prevail.