April 1st No Foolin

Expect plenty of bad new to be reported in the financial sector today.

UBS financial reported losses of 19 billion associated with sub-prime, it's stock price rallied 10%. Deutsche Bank reported a write-down of 3.9 billion, it's stock rallied. Pardus Capital hedge fund announced it is suspending redemption's, Lehman Bros. announces it will seek 3 billion in new capital to resupply it's liquidity reserves, Legg Mason injects 195 million to help money market fund, and last but not least, Thornburgh announces plans to raise 1.35 billion to stave off bankruptcy.

The early call for U.S. equities is for the markets to open higher. Folks, if the market refuses to go down, there are only two other options. One, is for sideways action, or two, the markets will rally.

My bet is that the equity markets are going to rally, substantially. Remember, stock investor's are forward looking. That means, that large institutional investor's, insurance companies, pension funds, etc. etc. have discounted the bad news we will be hearing in the next couple of weeks. Additionally, huge pools of money have been on the sidelines invested in treasury securities, money market funds and the like. Tons of cash is sitting around waiting to re-invest into equities.

The mid-January and early March lows are the crucial support levels. If I am wrong, the market will fall below those levels, if I am right, look for new all time highs in the S&P 500 index, the Dow Jones Industrial average and a major rally in the NASDAQ, sooner rather than later.