Key reversal day

Well, Monday was fun.

The Treasury’s announcement of a public/private partnership to help banks get the bad assets off their balance sheets got the Wall Streeters jumping. Add to this the news that sales of existing homes were up way more than expected and we got a rally that has brought us to the biggest two week jump in the markets since 1938.

The broad market indexes were all up almost 7% - just for the day. That’s really phenomenal! The Dow Jones closed with a gain of 497 points to 7775. The NASDAQ ended at 1555. The S&P 500 blew through the 800 level, finishing at 822.

Oil advanced on the increasingly positive economic outlook, adding $1/bbl to $53. Gold backed off, ending at $938, down $14/oz

Many naysayers are already out in full throat, decrying the likelihood of continued market strength from here. They always show up at transition times like these. Some have a vested interest in being blues singers as that’s how they’ve garnered a following. The guy the media calls Dr. Doom comes to mind. Some are people who just can’t acknowledge that the trend has shifted. Pay no attention to them at all.

Profits will be taken, to be sure. Stocks that have run up so much in such a short period will move back lower as a result. That doesn’t mean we’re going all the way back though. It’s just how the markets work. Up some, back some and then up some more. Over time, the up has always been more than the down.

Mark Mobius, the executive chairman of Templeton Asset management, had this to say today. “With all the negative news, there is a tendency for investors to hold back. You have to be careful not to miss the opportunity.”

I totally agree.