Dow Jones was up more than 3% on Tue 1 Apr 2008.   The overall sentiment improved tremendously with gains for the major Asian markets.   The rise to me did not make sense in the Wall Street, no fundamental economical changes had taken place.  UBS and Lehman were issuing new shares to bolster their balance sheets and both lose severely in the sub prime crisis.

Somehow or other some guys in Wall Street take that as a signal that the sub prime crisis would be over and the indexes danced.  Is it?  Just not long ago, there were predictions that the sub prime issues were here to start for a long time until the USA domestic market absorbed all the excesses of the previous decades.   A week went past and everything seemed to have been forgotten.

Today’s futures indicated a mixed start in the USA market which is not unexpected given the tremendous rise yesterday, so the initial hours would not be eventful, what needs to be taken into considerations is what happened later.

I would urged extreme caution and not let euphoria get over your head.  The sub prime crisis took a decade to form, it would dissipate so quickly,  we need to exercise caution and not rally at every supposedly good news while ignoring that fundamentals are still unchanged.

Today Bernanke will testify about the health of the economy to Congress.   I do not expect a silver bullet but felt that he had exhausted most of his bullets already.   The Factory Order Report or The Manufacturers’ Shipments, Inventories and Orders Report is due today.   It is important as it provides some forward looking or leading indicators of USA GDP.   I would be looking more closely at that then Bernanke speech.