Are the Europeans finally on their way to solving their bank problems? Stock
investors seemed to think so Thursday the Dow rocketed 183 points for the third
big daily gain in a row. Reportedly, EU governments are hammering out a plan to
bolster the capital cushion of Europes banks and are allowing the lenders to
shed toxic assets (presumably including Greek government bonds). At home,
investors took comfort, albeit modest, from the latest weekly report on initial
claims for jobless insurance . According to the Labor Department, claims rose
6,000 in the week ended Oct. 1 to a seasonally adjusted 401,000. While a figure
around 400,000 still indicates turtle-paced growth in the labor force, its
certainly better than 440,000 or 450,000, which would suggest an oncoming
economic slump. For now, at least, it doesnt look as if a double-dip recession
is imminent. Is this the Beginning of a Market Rally? OK, then. What about that
Q4 market rally Ive been predicting? Have we just witnessed the kickoff? Quite
possibly, Tuesdays intraday low was the final bottom for the correction dating
back to the April 29 high. However, if the European hopes prove false (again),
share prices could slip back just as quickly as theyve bounced. So, after the
brisk three-day run weve had, Im not inclined to chase most stocks higher.
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