Short Squeeze on FT Story: Dave's Daily

With stocks down sharply throughout the day a powerful last minute short squeeze was launched after an FT story suggested EU ministers were "looking" at new plans. These plans are "under discussion" but there is "no formal decision". This was enough for an oversold market to rally sharply. One major condition which was much heralded throughout the day was major indexes were in bear market territory. Bulls are desperate to this and would likely latch on to any news that can generate a much needed "stick save".

Apple (AAPL) launched its next iPhone model which was greeted with a yawn. I'm sure it's a great product but hard pressed consumers may not have the money for another gadget when what they have now will do. In fact, after the announcement the stock slid over 5% but it rallied with HFT buy programs (bulls love them now) to close the day only slightly lower.

Everything reversed course from AMR (American Airlines) to Financials (XLF), Industrials (XLI), Emerging Markets (EEM), Europe (IEV), Bonds (TLT) and Commodities (DJP)

For now, color this a Turnaround Tuesday on steroids. The bottom line is will European players must make a real deal that sticks. None has thus far and talk is cheap.

After the close Moody's downgraded Italy's debt three notches to A2 which isn't sitting well with after hours trading. Further Moody's is preparing to downgrade seven Hungarian banks. Maybe these downgrades will stimulate a resolution from the Europeans. The FT editors will have to get busy. The CME is getting busy curiously lowering futures contracts on stock indexes by 23%--now that's the bullish bias at work.

Volume was quite high as the market rebounded from bear market levels. Breadth per the WSJ was positive.

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