Wall Street Today: Problems and Good News

Below are the market pre-open comments from Alfred E. Goldman, Chief Market Strategist at Wachovia Securities.

Yesterday's market action was different from recent performances. The market was shaky and ragged for most of the session as the popular averages swung up and down but with no real conviction in either direction. The good news was the 240 Dow point lift in the last hour of trading and the reason for the big rally. We believe the credit goes to a report that the Administration is considering a plan to subsidize mortgage payments for troubled homeowners who can pass a standard appraisal and affordability test.

The major problem in the stock market the past several weeks has been disagreement and confusion over the various stimulus and bank rescue plans. Economists have been very mixed in their opinions and the public has become increasingly negative. Meanwhile, the financial media has been stoking the fires of discontent all day long. Well, now there is a plan that we believe makes a lot of sense and probably would be very popular. This is good news for a change and could spark at least a short term rally based on the very bullish supply/demand ratio for stocks and the big bearish mood.

Almost everyone realizes that our economy will recover. It's simply a question of when investors will start to discount the recovery. As they don't ring a bell at the bottom, we have been advising investors to buy pullbacks but don't chase rallies. However, if we can get several days of solid upside, we will become even more aggressive for investors.

Today presents several problems. First, probably some normal giveback of yesterday's big late leap upward. Then we have a three day weekend and investors have to decide whether they want to own stocks or not over that period as that's an extra day of potential news. Looking past the weekend, it's about time for some positive reports about the potential of the economic and financial stimulus plans.

Some good news is coming out of China where their economy is reported to be showing signs that its stimulus package is taking effect. An economist with Merrill Lynch stated that China looks set to be the first major economy to recover from the current global meltdown. If China can, can we be far behind? Folks, some good news is starting to pop up.

Today - stocks in Europe and Asia advanced on speculation governments will expand efforts to revive the economy. U.S. index futures climbed.