Investor Confidence Rising

All indicators point towards another rally in the markets tomorrow. This is great news for investors as many economists believed that the jobs report and news of the increasing unemployment rates would send the markets down come monday. So what changed? First Asian markets are exploding right now with the Hang Seng up 3.11% and the Nikkei 225 up 1.27%.  HSBC was the big winner with the stock skyrocketing after news that the company raised billions in capital. European Index also jumped on the news all of which are up at least 1.5%. To keep the good news rolling the dollar has strengthened against all major currencies. One strong market play for the upcoming year is the Oil Industry. I see the U.S. corporate oil companies reporting strong earnings this upcoming week which shall help be another sign of economic recovery and sustain crude oils two month rally. Adding to investor optimism were comments from U.S. Federal Reserve Chairman Ben Bernanke that the central bank’s strategy to ease America’s financial crisis through billions of dollars in aid and other measures was starting to pay off. Many analysts have warned investors that markets have been driven hire by large institutional investors who were forced back into stocks after sitting on the sidelines most of the year. Some could add “anxiety investing” into the equation with people buying in desperation not to miss out on the rally. If any signs of weakness were to come out in the likes of bleak economic data or weak company earnings we could see the overall investor optimism start to decline. Many analysts are scared with the rapid rise in the markets saying the news does not justify the returns we are seeing. Personally, I agree and would add caution in current markets as soon the weakness of the economy will strike back to reality. Back to a lighter note I would agree with trying to play the markets at the start of this week as confidence and asian markets should push stocks higher. If oil too can report impressive earnings then rallies could extend for the rest of the week. Good news on Wall Street is what I like to hear but just make sure to watch your risk and not get burned if this rally were to end.