The market managed to reverse almost 200 points of losses within the last hour of trading thanks to commentary on cnbc about a rescue plan materializing by tomorrow morning for ABK. Its amazing how much weight the market is giving to these bond insurers. The market seems misguided on the entire issue, but it's important to trade with the market, not against it. I was getting nowhere all day with my trades until I established a final large long position in BIDU at 238.5, and watch it rally almost 10 points higher in the last hour.
We'll see if any rescue plan materializes tomorrow, but I highly doubt they can fool the market much longer.
Btw, are you noticing the divergence between BIDU and GOOG? Is the catch up game starting? Rarely is the spread under 200 points between GOOG and BIDU, but we have that today. Pairs traders should be jumping on this opportunity to buy GOOG and short BIDU here. Will be interesting to see how this plays out.
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