Tuesday, October 4, 2011
The Surprise Bounce
October 04, 2011
After the publication of a FT report that "EU leaders are actively looking for ways recapitalize European banks in a coordinated plan," stocks fueled a furious rally in the final trading hour today. It makes the two primary market indies, S&P 500, and Dow Jones Industrial Average, presented a big “W” in their daily-trading chart.
Although markets bounced back because of the prospect of the new plan, however, the details of any plan to recapitalize the banks are unknown so far. Considering the immaturity of any plans to actually go ahead, I am suspicious of the rationality in market’s reaction today. Will the news regarding the recapitalization plan become just one of rumors about an eurozone solution flying around over the last few weeks? Only time can tell we the truth.