Vikram Sings A Pleasing Tune

I have been dealing with IT issues this morning, which is always a fun way to start your day. There was not a lot of news before the open today, but the comments out of Citi (C) were enough.

CEO Vikram Pandit said that the first 2 months of this year for Citi have been the most profitable since the third quarter of 2007. Those comments sparked a rally in the bank stocks. Citi spiked +25% early on, and the bank index rallied roughly +10% (brokers too).

A little while ago, US Rep Barney Frank commented that the mark-to-mkt accounting rule must be improved, made more flexible He also said that he expects uptick rule to be restored in about a month. This would be a nice boost, as investors perceive that it would slow the ability of short-sellers to lean on the market.

The mark-to-mkt rules are going to be more difficult to suspend, given that Fed Chairman Bernanke said this morning he was not in favor of it. But Congress will hold hearings later this week to explore the idea, and maybe public opinion will be enough to sway the voting members and the SEC.

Asian markets were mostly higher overnight; the dollar is lower vs. the Yen and Euro today; oil is trading higher, while gold is lower on the day; the 10-yr yield is higher at 2.97%; and the VIX is plunging -10.7% to 44.35, breaking just below its 50-day average.

Trading comment: Patience is the key. The market continued to move a bit lower after I had taken profits on most of my hedges, but we were so oversold that the risk of a big bounce like today was high. I said I wanted to wait for a bounce, and it appears to be here today. The maket is up a huge +5.5% right now, but I actually think this rally should carry further over the next week or so.

The S&P 500 should run into resistance around the 740ish level, which is where I would look to buy back some of my etf hedges, or add to the partial positions that I still have on for the Nasdaq (QID) and emerging markets (EEV).

long EEV, QID