Stocks Also Stage a Rally

Stock futures have also now begun to stage a rally -- up 100 points on the Dow. This is somewhat surprising, given that the price of crude oil has risen $2 today. Apparently, stock traders like what they are hearing in the Congressional hearings from Sec. Paulson and Fed Chairman Bernanke. Sec. Paulson has reassured the markets that Fannie Mae and Freddie Mac are adequately capitalized and are not insolvent, as the rumors suggested yesterday.

This rally, however, looks somewhat weak to me. It probably has its legs on relief that maybe the rumors regarding the financials are not as bad as we thought over the past few days. The Lehman Bros. rumors persist, however. If oil continues to rise, it's hard to imagine how it can continue. It looks like more of a relief rally to me. Probably temporary, as the underlying problems aren't going away.

The longer-term daily charts are showing early signs of a possible consolidation pattern setting in, with more rallies one day and collapses happening the next day.