Financials Rally Despite Fannie/Freddie Concerns

The New York Times reported that some investors feel a government bailout for Fannie/Freddie seems inevitable. The stocks opened at multi-decade lows again, and weighed on overall sentiment somewhat.

Also, oil was trading higher at the open, above $116. But the inventories report showed a big build in crude oil stockpiles, and this helped oil prices ease. The market began to bounce as oil reversed lower. The energy stocks were the biggest winners in the first hour of trading, but if crude continues lower, they might follow suit.

Hewlett-Packard (HPQ) reported better than expected earnings, and also issued guidance that was above estimates, a surprising report given the environment. This is helping give techs a boost, and the Nazz is outperforming so far.

The dollar is higher vs. the Yen and Euro today, which could pressure this early bounce in commodities. Asian markets were mostly higher overnight. China's benchmark index surged more than 7% as speculation the government may be considering a fiscal stimulus package.

The put/call ratio is very high at 1.26, which could help this bounce have legs today. The 10-year yield is lower at 3.81%.

The market has been weak the last couple of days, and I will be looking to use today's strength to put on some hedges in the event more weakness lies ahead.