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What contribute to stock rally this week?

  1. Citigroup was profitable in the first two months of 2009 and is confident about its capital strength, Chief Executive Vikram Pandit said, easing concerns about the troubled bank's survival prospects. JPMorgan Chase and Bank of America also said that they were profitable in the first two months of the year.
  2. The number of new lows on the S&P has been contracting over the past several months. Even though we are still below where we were in October the number of stocks making those lows is about half. That's a bullish divergence.
  3. The uptick rule, which limits short-selling in stocks, could be restored soon, Rep. Barney Frank of the House Financial Services Committee said.

Why we should buy stock now?
  1. Everyone are scared.
  2. The government will not allow the economy to die and won't quit trying to fix the thing till they actually do fix it.
  3. The odds of the market moving up are greater than the odds of it dropping too much further.
  4. It's time to stop worrying about what the market has done to you and to start thinking about what it can do for you.

2 comments

Mehul said... @ May 2, 2009 at 10:06 AM

I agree but I still have some concerns.

1. I know all the banks easily beat all the analyst estimates, but I still find it hard to believe that they don't have toxic assets anymore. Plus, the unemployment rate is still pretty high..raising the potential for more foreclosures etc...which might lead to more toxic assets etc.


But then, you are right, government has been pumping a lot of money into the economy, & that is starting to show its results.

Also, this might be a good time to scoop up some stocks. Its just that, I don't know if this rally will last long...but if the market goes south, that'll be another good opportunity to buy some more!

Very interesting post.

Alvis said... @ May 2, 2009 at 8:42 PM

Hi Mehul, thanks for your comments. Yes, is definitely good time to pick up some good stocks for mid to long term investment.

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