Dollar Spikes, Commodities Fall, and Lehman Might Get A Bid

In this market, things change quickly from day to day. No trend last for very long, and that makes it difficult but for the most nimble of traders.

Today, the dollar is rallying and that is taking the steam out of the bounce that the commodity stocks enjoyed over the last 2 days. Oil is down 3% to just over $118, nat gas is down, ditto for steel, copper, etc.

Financials got a huge bounce in early trading after Reuters reported that Korean Development Bank is looking at Lehman (LEH) as an acquisition target. The stock is up roughly +12% on the news, and analyst Dick Bove said the firm could catch $20 as a price target.

$20 would be a nice pop from yesterday's closing price, but it is a joke compared to where the stock has been for most of this decade. And the company recently completed a large capital raise at round $28 per share. So I'm guessing those investors might not be too happy.

The financials stocks are leading, with retailers faring well also. Gap (GPS) reported strong earnings. Gap? Go figure. Maybe back-to-school shopping is helping them, after years of missing the boat.

Another boost for the market in early trading were comments that Warren Buffet made on CNBC that he felt stocks were more attractive at current levels than they have been in a while. He said people are now "looking at the glass as half empty, as opposed to half full". Maybe Buffett is a proponent of the 'negativity bubble' thesis I often write about?

He also said he had been buying more of his favorite financial stocks, but he declined to say which. My guess is he has been adding to Wells Fargo (WFC). Last, he said he is no longer short the dollar.

The big bounce in the first hour of trading is starting to fade some. I am undecided if we will see further short covering into the close, or more selling as traders close positions ahead of the weekend.