Monday, October 13, 2008

Overnight Gap

Markets are trading up strongly higher across the globe this Sunday evening (+6 to 10%). One one hand, gaps like these have tended not to hold. On the other, it's incredible how unimpressive the move looks on a chart when viewed against how far down we came last week.

PREOPEN: We are actually down a buck or so from the overnight highs... still room to move higher. As CNBC pointed out, with the bond market closed, there is less opportunity for rotation back into equities [add: or the other direction for that matter!]. That may not be such a bad thing. By the same token, I still wonder how much Lehman CDS selling is ahead, not to mention WAMU next month. A strong move higher like this may relieve the pressure to raise cash all at once -- but it's really hard to get a handle on that. Morgan Stanley up 60%? Watch that first hour. Crawling around the 5-day about 40-minutes in.

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