The major indexes made their biggest gains for the week since last October led by bank stocks. The rally followed statements by major bank leaders that they were profitable, except for taxes and special items, in the first two months of the year. How big the special items are was not disclosed so the newly bullish mood may fade when the realities of first quarter earnings are revealed in April. In the short term, it seems the rally has some legs but whether or not it can be sustained will depend on the Administration delivering a convincing bank rescue plan which credibly explains how the public/private partnership to deal with toxic assets will function and how the assets will be valued.

The major indexes are in a double bottom (DB) formation formed from the November and March lows and the rally that was extinguished at the start of the year. The double bottoms formed by the DJI, S&P 500 and Russell 2000 (not shown here) are too far vertically separated to meet the strict definition that we use (maximum 3% separation) but the NASDAQ Composite fits the requirement comfortably as the chart shows.

The index would need to gain another 17% before confirming a breakout from the DB which would put it back to break-even for the year. That seems quite a challenge with the national and world economies continuing to deteriorate but if talk of a recovery of the domestic economy starting around October continues, then a move upwards 6-months ahead of that is not unreasonable as traders and investors start to place bets that a recovery is on the way.

Newsletter Subscriptions

We regret that due to a drop-off in subscribers as the market has fallen, we are forced to change our free newsletter policy. From now on, the newsletter will only be free for the first 3 months of a newsletter subscription and thereafter will be available for the nominal fee of $4.95 a month. Regular subscribers (Bronze and above) will continue to receive the newsletter as part of their regular subscription, of course.

We've received only positive responses to the new watchlist format so we are introducing alerts based on the new filtering options on Monday. These options allow you greater control over the alerts you will receive so you need focus only on those that meet the criteria you have selected. While the volume of alerts has been slow in the last months, we can expect that to pickup if the rally continues.

We will continue to keep the 'legacy' watchlists available for a few weeks while you all become accustomed to the new ones.