Bank Plan, WFC Spur Rally

Wednesday, January 28, 2009

The market rallied an extra 51 points after the FOMC policy statement release adding to the day's 150-point gap up. The market closed 201 points higher for the session. Wells Fargo released its earnings report before the open surprising Wall Street by earning 41 cents per share in the 4th quarter versus the 33-cent consensus (ex-items). WFC rallied hard closing up 30% in spite of a large revenue miss.

Congress was busy last night putting together a $825 billion stimulus package hoping to have it signed into law by mid-February. Rumors also swirled around the Street that Congress may create so-called "bad bank" program. The rumors caused a flurry of short-covering pushing the financial sector up over 10%.

We have broken the 8,250 resistance level and I expect more upside over the next couple weeks. I believe we have just sustained yet another successful retest of the bear market lows as we continue to form a nice base at these lower levels.


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