A deadcat bounce or has the market really bottomed?

"This is worse than a divorce. I lost half of my net worth and still have a wife."

I called for a rally on Thursday, but I guess I was two days late. Today the markets rallied with dow gaining about 940 points. I dont think that this run would sustain, with LEH CDS cash (270 Bn) settlement due on 21st Oct, The CDS spreads have not come down yet, 3 Month LIBOR is still trading at 4.75 (down 7 bips though), CP market is still frozen, no new data points indicating a recovery of the economy. But well, this rally has been long pending and it did. I think the market would shake off part of todays gains in this week, but I doubt whether it would be back to where it was two days back. I wish I had kept the Dowjones Index (DDM) one day more. But well, the best trades are always the trades that you SHOULD have done.

My pick, APWR had an amazing run today , gaining about 68% over fridays close. The stock is still trading below my price target - $20. I had my limit order at $6.00, but the stock once crossed never touched it again. Should add more of it to my already existing position.

Deal logic reports that the number of deals that are either withdrawn, rejected or allowed to expire stands at 991 so far this year. Monday alone, five deals were put off, the notable being the United Technologies' $2.6 billion bid for Diebold. Getign financing for a 1Bn deal is almost impossible in the current market situation, where as financing of a 10Bn deal was relatively easy last year.

On the bright side, The U.S. government is set to buy preferred equity stakes in nine top financial institutions as part of its new comprehensive plan to tackle the credit crisis. The comprehensive plan and the money involved is going to be made public tomorrow. I guess this would drive the markets even higher, but as the ownership stake in the financial firms involved is diluted, I guess the financials would trend lower. However, the steps taken by fed and Treasury seem to lag the steps taken by the european counterparts.. European banks were the first to insure the deposits, put in direct cash (equity) infusion into banks, guatrantee/insure inter bank lending - a relatively m ore hassle-free steps than buying the assets from the banks. The TARP plan unviled by fed and the treasury is still very fuzzy and ambiguous and with uncertain effects on various assets classes. Treasury, I guess would take cues from ECB and follow suit before the shit hits the fan..


Feeling sleepy tonite.. My day was pretty tiresome, coz of the markets and also coz my younger brother is laid off from his current position.. Good thing is that he would continue to be on the pay roll for the next two months. Hope things go smooth from here! QI closed their operations in Cary.. and selling its stake in its subssidiary to my elder brother's company (MU).. I'd be happy if Mahi were able to get a job in Boise or in Dallas!!