Upwardly Mobile

What you need is a big strong hand
To lift you to your higher ground
--Madonna

News of a government plan to buy $1 trillion+ of distressed bank assets ignited a huge Monday rally, with the major indexes gaining about 7%. The bank index (BKX) rallied nearly 18%, which should be no surprise as this program would effectively take non-performing assets off bank balance sheets and replace them with 'safe' dollars.

Anyone with a brain can see that this plan is inflationary, and that it gives institutions that made a boatload of poor decisions a free pass to make more of the same. Even before today's announcement, financial institutions have been gorging on the bailout feast.

Just another in a long line of government interventions seeking to solve a debt and spending problem with more debt and spending.

Long term implications aside, markets appear ready to view this news as positive. Over the past two weeks, major indexes are up over 15%. While near term resistance looms, it appears to me that markets have room to run. SPX 975-1000 seems doable.

Keep in mind the ferocious nature of bear market rallies, as exemplified by the post-crash market action from 1929-1932.

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