Late day day reversal..

7am EST The late day action was heartening for the bears and hard for the bulls. The mild rally fell off a cliff in the last hour or so. The bulls will tell you that the fact that we haven't had a massive selloff after the big rally from the last 6 weeks is a positive sign. While I definitely agree with that idea, I am not necessarily convinced that we go dramatically higher in the near future. We are probably not going back to the lows, but the rally needs to correct itself before going much higher.

I would like to see the market lower today. It will make for some healthy profit taking as well as the opportunity for solid, longer term money to work it's way into the system. This longer term money will be the base for the next leg of the rally.

The (MS) trade from yesterday went well. While it did get slightly above the key $29 level, it didn't have a rush of volume I would be looking for to call it a breakout. I still think it can pull back and give you an opportunity to buy some more shares.

I am going to give you a trade for today that is a little different than what I normally do. I am normally a technical trader. This one is basically all fundamental. I think you can buy Bank of America (BAC) today. At this point, the stock is simply a supply and demand story. I think the demand is there for the stock, but the supply had been unknown for the last couple of weeks with their announced capital raise. This made some of the big money shy away.

Bank of America sold in excess of $8 billion in stock last night. The capital raising is just about over. With the supply well known, and institutional investors feeling more comfortable that the additional dilution is just about over, they will probably feel comofrtable buying shares. I don't think you are going to get a much better price to buy.

While there is some resistance from the traders who were buying in the $14-15 range, going from $11-12 to $15 is a nice percentage gain. If the stock can get above the high of $15.07 from May 7th, your next real resistance would be near the 200 day moving average, currently 16.32. Either way, I like the risk reward. Until next time, stay low risk..