MASSIVE GLOBAL SUPPORT FOR BANKS PRODUCES STRONG STOCK RALLY -- TODAY'S GAINS REPRESENT THE BEST DAY SINCE THE CRISIS STARTED

GLOBAL STOCKS SCORE BIG GAINS ... A huge international rescue plan for banks has finally ingited a strong global stock rally. European gains average 10%. The same is true in Hong Kong. The U.S. market is just following along. This is clearly the best market day since the crisis started nearly a month ago. The Libor rate is dropping in London, which means that the lending paralysis between banks and corporations may finally be easing. The rally is extremely broad based with NYSE advancing stocks swamping declines. Other markets that have sold off recently -- like the Euro and commodities -- are rising today with stocks. Gold, which had risen during the crisis, is continuing its selloff that started on Friday. The bond market is closed for the Columbus Day holiday. Volatility indexes are dropping as stocks rise. As you know, I've been expecting some type of October bounce which is the normal seasonal pattern during big selloffs. Admittedly, I didn't expect it to start from a such a low level. All we can say at this point is that an oversold rebound is due and it appears that we're finally getting it. How far it carries, and how long its lasts, remains to be seen. The hourly bars below show the short-term improvement in the Dow, the S&P 500, and the Nasdaq Composite using hourly RSI (Chart 1), MACD lines (Chart 2), and the Commodity Channel (CCI) Index (Chart 3). Initial upside targets are the upper hourly Bollinger bands.

Chart 1

Chart 2

Chart 3