RSSRoom to Run
By Chip Hanlon | October 14, 2008 | 9:27 AM | 0 Comments
Despite a "Paulson Effect" on markets similar to the one I described about President Bush last week (I just ran the Tivo back and pre-market Dow futures shed 100 points during his speech this morning...thank goodness he only spoke for seven minutes), yesterday's massive rally is going to keep running higher at the open, obviously.
You can dislike this bailout plan as much as you want (I'm with you), but just take a close look at exactly how far many individual stocks had recently fallen. Even with yesterday's huge rally, most stocks remain deeply oversold.
Longer-term investors worried about where we're heading with all this and looking to sell into strength should hang on and ride this wave for a bit. Shorter-term traders, meanwhile, still have plenty of names in a variety of industries to buy. A lot of folks are going to think to themselves, 'I can't buy a market that just ralled 1000 points or a stock which has already bounced 20%,' but risk-tolerant traders shouldn't overthink this one.
Ha--as I type this a CNBC interviewee just advised that people should just "watch and wait" and now as I type this very sentence the guy aftre him is saying, "I'm not convinced yet."
That's exactly what I'm talking about, and it's the type of sentiment that allows for more upside from here.
Markets are going to keep liking this bailout for a little while and credit conditions will improve somewhat. Is this a recipe for a new bull market? I strongly doubt it at this point but there's still room to make money on the long side.
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