Early this week, we are seeing a continuation of the mixed signals from the corporate world, with a bias towards the downside shifting more positive as investors shrug off some nasty earnings reports and buy up good stocks along with the bad.

We've seen a sharp rebound in financials over the past week or so (helped along by regulators cracking down on naked short-selling), plus the second quarter numbers weren't as bad as they could have been. Late last week and earlier this week Wells Fargo (WFC) and Bank of America (BAC) added to the party by beating estimates to the upside and rallying nicely.

It looked like that mood was going to sour today, however, with Wachovia's (WB) shares tanking in early trading after reporting an $8.9 billion loss and culling its dividend to almost zero. Regional thrifts Fifth Third Bancorp (FIFT) and KeyCorp (KEY) also posted losing numbers with loan-loss provisions and high loan defaults and slashed dividends. Surprisingly, both of those also saw their shares rally strongly on the day. I supposed because the horrible numbers weren't really REALLY horrible.

Airlines also posted some heavy losses from increasing fuel prices and write-downs but still rallied strongly in late trading, including US Air (LCC), JetBlue (JBLU) and UAL (UAUA).

It's promising to see investor sentiment improving, but I'm not sure a return to the old frantic buying on any news is a positive development either. Some of these stocks, such as Wachovia, deserved to be sold off, not to rally wildly into the close. One explanation is the speculators with "hot hands" who are now slithering away from the oil and commodity markets are looking for the next thing to jump into. I don't believe it's all legitimate and sustainable fundamental buying which can be relied on as a technical indicator of improved support or sentiment.

Meanwhile, I do see some very strong trade potentials in the global markets and away from the current "hot" and unsteady hands, where I expect to see long term investing that will be sustainable and keep a logical floor under the positions. I'm especially interested in an electric car play with huge global potential and one of two global infrastructure plays I'm working to narrow down. I'll be discussing the details in this week's G3 Global Options.

Best wishes,

Jeff Manera
G3 Global Options,
Emerging Markets Insider
Email: Jmanera@EmergingMarketsInsider.net