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US Markets - 11 March 09

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DOW = 6926, +379 (5.8%), S&P = 719.6, +43 ( 6.37%)

The market jumped sharply overnight on the news that Citigroup is profitable in the first 2 months of 2009.

This jump coincided with a hyped talk of a violent and sharp bear market rally, so there could be some positive momentum for the remainder of the week as investors buy into the story. The previous US rally went up from a low of 7453 on 21/11/08 to a high of 9088 on 6/1/09, a 22.5% rise in 45 days. Although the majority rise took place in the first 8 days (high of 8835 on 30/11/09), and got really choppy after that.

A 20-25% rise from recent low of 6470 targets ~7750 to 8090 points, which is the bottom of the range for much of Feb 09. The next quarterly earnings announcements for banks are around mid April, so the current rally could concievably extend into that period.

Much of the sharp falls in the past month are due to the financials, so if the banks are in fact no longer terminal, it is possible that some of the fall may be reversed. However, main street is unlikely to recover in the short term. Healthy banks is a necessary but not sufficient condition for a growing economy. So with consumer demand still low, this is definitely not quite the end of gloom yet.
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