The BIG Tuesday!

FUNDAMENTAL ANALYSIS
The Dow staged the BIGGEST single day gain in 5 years of 416.66 points today! This truly dramatic turn around in investor sentiments was due to the Fed now allowing investment banks (primary dealers), including those hurt in the subprime crisis, to borrow from the Fed directly for 28 days in exchange for those useless mortgage papers! Previously, Fed member banks were able to make such loans for only 1 day! That doesn't solve anything at all! But now, with soooooo much money on loan for 28 days, a lot of this liquidity crisis can be instantly solved! This is extremely creative as it serves also to put a value on those CDO papers which were not only unwanted but also mercilessly written down or written off by these investment banks! This could be the BIG turn around that solves this whole financial mess. Uncle Ben did something right at last! Actions like this solves problems! Rate cuts only creates problems! The fact that this news not only spurred the financial sector but resulted in a broadbased rally suggests that investors saw this not only as a way of solving the financial crisis but probably as a start to turning the whole economy around as well! Bond yields were also up across the board suggesting that bond investors were moving out of bonds and into stocks at last. The dollar also strengthened against the Euro as the possibility of more big rate cuts diminish. In fact, Fed fund futures are indicating a certainty of only a 25 to 50 points cut during the next meeting. Compare that to the 75 to 100 points cut suggestion just a couple of days ago! Well, I think uncle Ben's smart for a reason afterall... KEEP UP THE GOOD WORK!

TECHNICAL ANALYSIS
The Dow completed a double bottom today and will no doubt go into the reaction rally I spoke of yesterday. According to the Dow theory, we will only know if this is the start of a new primary bull trend if the pullback in this reaction rally does not make a new low. For tomorrow, I would not be surprised to see a good follow up as the general public catch up on the evening news and take some action tomorrow as well. Retail investors simply cannot stay out of the market with such a strong fundamental reason as the pillar. After that, do not be surprised to see a few sideways or even slightly negative days as short term traders take some profit.