History rewritten once again.......

Historical closes for the Dow seem all too regular now, or at least for the last two weeks of trading anyway. Thankfully, today's was the first positive record-breaking session in the last 14 of them. I will refer to my "Rally Continues" post, and admit that I certainly didn't accurately grasp the level of investor confidence that remained in the markets all the way through the close, the Dow, S&P, and Nasdaq all finishing up 12%. The news that led this incredible surge was both the new plan for goverment to begin buying shares of bank stock (following in Gordon Brown's footsteps), as well as the capital injection for Morgan Stanley, which led to an 86% advance for that stock. SPX volume for the day was 58.5 million shares traded compared to 95 million shares last Friday 10/10. A move like today's without the trading volume behind it indicates to me that it was a bit inflated. Another positive, however, was the VIX finishing down 21% on the day, which is twice the amount of any move last week when the markets were crushed.

So the obvious question now is: What could tomorrow possibly bring?

I definitely see a retracement, although I think it will be minor. S&P futures are down slightly in post-market trading. The barage of 3Q earnings begins, but there is much uncertainty in how the markets will react to what should prove to be announcements that are below street estimates for most of the sectors, financials epsecially. Bad 2Q earnings went almost unnoticed, as greater woes such as Lehman simply weighed more heavily on investors' minds. Will the "new" bailout plan mixed with the upcoming presidential election weigh more heavily on investors' minds in a positive way then bad 3Q earnings? I think so. But I don't believe we've hit bottom yet either. I see a short-term bull run for the next 3 weeks until election time.

Today should make any investor feel warm and fuzzy inside, but DO NOT lose sight of the larger picture and just how deep of a hole we are in.