tuesday trading, page-18

Here's an example of the virtous/vicious circle effect. Citigroup's rescue has meant that the mortgage backed securities that were causing it the problem in the first place are also bouncing. I assume the market feared they were going to have to dump them and everyone else would have to mark to market at a loss. On top of this other banks have been shorting the indexes in order to cover their own potential losses. So fundamentals have now improved for all banks holding mortgage backed securities - not just Citigroup.

Short term quite likely the DJIA will have a modest pullback from the big bounce, but time to watch for signs of improvement in the fundamentals -not so much the trailing indicators like GDP etc.