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The banks were closed, but on fresh global bailout plans bulls decided to do “business as unusual” to kick off the trading week. As of 16:10 ET the “Cubes” (QQQQ) and “SPYder” (SPY) are up by an amazing 12.15% to nearly 14.00% and more than solidifying and leaving behind, Friday’s possible “Mother of all bottoms.”

“Wow again!” It was thought last Friday’s late session forty-minute and near 12% price push from abyss-like lows would be hard to improve upon. That being said, while Monday’s attendance levels (volume) were reduced due to the Columbus Day holiday finding bankers shutting their doors (willingly); bulls still in the game weren’t afraid to make a run for equities.

A second straight final hour buying surge put already strong gains in place and into record books for the S&P500 with its plus five percent sprint to finish nearly 14.00% on the day. Buy, umm gap side interest began in earnest in European markets where percentage gainers ranging from 4% to 6% front ran stateside efforts following a second round of global initiatives by policymakers to inject liquidity and restore confidence to the financial markets.

Highlights of the global relief efforts thus far include the Fed and other policymakers’ ‘unlimited’ capital commitment to short-term funding of markets. The Brits offered out a near $64.0B commitment in buying top UK-based banks if necessary, while ECB members Germany and France took comparable actions. A number of ECB parties stated guarantees of new bank debt through 2009, while others confirmed plans to guarantee interbank loans, as well as direct investments into a broad array of financial institutions.

In passing, the handful of story stocks in the news did little to detract from Monday’s broad-based bout of bargain-hunting and may have even helped shape the session to some degree. Of most interest to investors, shares of Morgan Stanley (MS) finished up a whopping 87%--although a less impressive closing price tag of 18.10 for anyone other than those which timed their knife catching routine exceptionally well.

Following a lack of follow through by Moody’s in regards to its Friday credit downgrade review of Morgan Stanley and a subsequent price shellacking in shares of MS—Monday’s bulls found the courage to vault and rally shares aggressively higher. Apparently helping support that decision was the company’s CEO announcing the firm will be looking at acquisitions following the closing of its 21% / $9.0B re-cap stake with Japan’s Mitsubishi UFJ.

As buoyant as the market gains were for the bulk of the session, the general opinion of analysts and media types was the rally was somewhat tempered heading into the final hour. Traders were purported to be waiting on little items such as the finalization of the details from this weekend’s broad-based efforts by world leaders. For its part, the US is expected to roll out a comprehensive plan, as early as Tuesday.

Apparently though, someone forgot to remind traders of those facts. Bulls of course, may have just opted for the almost forgotten “climbing a wall of worry” shtick. Of course too, despite the incredible final hour climb on Friday, the market was radically oversold with headlines and stats to confirm just how bad of a week it was—and which obviously helped shape Monday’s final verdict.

Monday’s grand finale may also have been the result of using the market as one of those discounting mechanisms—the type which tries to forecast correctly the state of economic affairs more than a few years down the road. Which on that note, maybe it had something to do with legendary hedge fund manager Julian Robertson’s CNBC interview?

The influential investor admitted to having snapped up shares of Apple (AAPL), Visa (V), Microsoft (MSFT), Baidu (BIDU) and MasterCard (MA) in recent days. All the more compelling, the actions were coming on the heels of last year’s call for a “doozy of a recession” and a situation which he freely sees as not being over and likely to find the economy in poor shape for the next 10 to 15 years. Hmm, “Do as I do and not as I say?” Time will tell.

Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual. 

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