Ambac's Rally More Like Recovery

The surge in Ambac shares Wednesday follows a couple of weeks of weakness in the stock as it had been trading above $1.50 as recently as mid-October. The selling pushed the stock to a near-term low of $1 in intra-day trading last week but it resisted breaking below a buck. On that basis, the rally appears to be more a product of relief than any fundamental change in the company's prospects evident in the numbers. Like most of the market, the stock is up significantly since its foray down to 35 cents on March 9. But it's still off more than 60% in the past 52 weeks, and has been tracking lower since August.

Just as with its descent, the level and speed of recovery in the housing market -- the biggest influence on all those acronyms -- likely remains the most meaningful factor for both the long- and short-term outlook for the stock.

--Written by Michael Baron in New York.

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