Insana: Surviving Sunday Surprises

This post originally appeared on RealMoney on April 28 at 9:10 a.m. EDT. To see Ron Insana's post's in real-time, you can click here to join RealMoney.

The Mamas and the Papas thought, some four decades ago, that Mondays could not be trusted. They sang about how every other day of the week was fine (yeah), but not Monday. And we know why: The weekend was over. It was back to the grind, the salt mine, the office.

But in this secular bear market, that all changed. In the last year, Sundays appear to be the riskiest day of the week, for Wall Street if not for Main Street. In the 25 years that I have participated in the financial markets, I can't recall a time that the "day of rest" was so fraught with risk.

Having cut my teeth in financial news in the 1980s and '90s, I became accustomed to "Black Mondays" and "Turnaround Tuesdays." But in the last 12 months, we have been repeatedly confronted with "Sunday, Bloody Sunday" almost every weekend, when a different financial failure, government edict or natural disaster takes on almost supernatural importance for the markets.

In just the last several weeks, we've had Sundays spoil or threaten the nascent, but very important, rebounds taking place in the financial markets. Those rebounds are of particular importance now because they represent the very necessary preconditions for a sustainable rebound in the real economy.

Despite recent improvements on Wall Street, though, the weekend revelations have threatened to challenge Main Street's ability to reconnect to the stock market's renewed, but cautious, optimism.

Just a few short weeks ago; the Obama administration fired GM ( GM) CEO Rick Wagoner, as the long arm of the government stretched all the way from the Potomac to Pontiac, Mich.

That extremely visible hand putting a steely grip on GM's admittedly wobbly steering wheel smacked not just of too much government interference in business, but of a level of involvement more typical of a president's handlers than of the president himself.

Such dealings are typically not just below the president's pay grade but also beneath the public dignity of the office. Such heavy-handedness can be (and has been) unnerving to financial markets unaccustomed to Washington dealing not so subtly with Wall Street. The nation's commander-in-chief should quietly delegate the task of removing a poorly performing chief executive, if it's remotely appropriate for him to do so at all.

The Sunday surprise of April 19 -- a leak of the plan to force the conversion of the government's preferred stock holdings into Citigroup's ( C) common shares, a move that greatly dilutes private sector investors and makes the government the largest shareholder in the nation's largest bank -- again sent shock waves down Wall Street, as that long arm of the law this time snaked its way up along the Northeast Corridor.

It was as much a political power play as it was financial re-engineering. The quasi-nationalization of the bank was something the president promised not to do, and this shift unnerved the market -- this was yet another reversal by an administration that has yet to clearly convey the course ahead.

And then there was this Sunday's "three-fer": the swine flu outbreak, worries about the unclear and unannounced results of the Fed's "stress tests" and the comments from White House economic adviser Larry Summers, who proclaimed the economy is taking the summer off ... and possibly the fall and winter as well.

These Sunday risks are playing havoc with investor portfolios, and investor confidence, on an all-too-regular basis. It's safer to go home and short the S&P over the weekend than it is to buy and hold.

I have to admit, however, that these most recent Sunday surprises also offer opportunity to those who believe -- as I do -- that the 27% rally in the S&P since the March 9 low represents an important albeit cyclical bottom for the stock market. That means I believe the rally has farther to go before a meaningful setback sets in.

These bloody Sundays, while creating short-term turbulence on Wall Street, are proving to be nothing more than corrections in an ongoing cyclical bull market. Each manic Monday that followed the surprise-filled Sunday has been followed (thankfully) by a turnaround Tuesday. The market's resilience in recent weeks is comforting for other fundamental and technical reasons as well.

Last year, when every weekend seemed to be dominated by the failure of one or more of our largest financial firms -- Bear Stearns, Fannie ( FNM) and Freddie ( FRE), Lehman, AIG ( AIG), Wachovia and others -- the markets not only collapsed on Mondays, they continued their declines on each subsequent day, week and month until this past March.

Happily, that pattern has just begun to change.

I believe secular bull markets are beginning in bank stocks, homebuilders, asset managers and selected technology stocks -- full disclosure: I own several in each group -- and the Sunday/Monday selloff is giving longer-term investors an opportunity to buy these stocks at reduced prices and enhance the total returns they are likely to realize in the next three to five years.

While we are witnessing financial history on a near-daily basis, the good news here is that the "news response syndrome," a phrase coined by veteran Wall Street technical analyst, Steve Shobin has changed for the better. This is a good sign that "green shoots," "crocuses" or even "mustard seeds" so frequently discussed by the Fed and the press are apparently now taking root.

The Sunday bloodbaths on Wall Street are taking less of a toll. And as opposed to just leaving "blood on the Street," they are instead becoming less violent and catastrophic with each occurrence, allowing Wall Street a little more time to heal after each and every one.

Now, if we can just be sure that the swine flu will turn out the same way, the world will be safer -- and a little more stable, too.

Author's note: Who on God's green Earth thought it a good idea for the FAA and the Air Force to stage a photo-op with a blue-and-white 747 buzzing Manhattan skyscrapers while being "accompanied" by F-16 fighter jets?

For those of us who survived the collapse of the twin towers, pulling a terrifying stunt like that without making it clear to Mayor Bloomberg, the residents of New York City and the media that the event was staged is not just thoughtless and crude, it also mocks the terror that all of us in New York and around the country suffered some seven and a half years ago.

The terrorist attacks of Sept. 11, 2001, left an indelible image on all our hearts and minds. Those who evacuated the buildings of lower Manhattan on Monday deserved at least some notice that the terror they experienced in 2001 was not being repeated.

Know what you own: Insana mentions banks and homebuilders. Companies in these industries include Wells Fargo (WFC), U.S. Bancorp (USB), Hovnanian (HOV) and Pulte Homes (PHM).

At the time of publication, Insana was long C.

Ron Insana has returned to CNBC as a senior contributor to the nation?s premier business news network. Prior to his return, Insana was a managing director at SAC Capital Advisers, a $12 billion hedge fund run by Steven A. Cohen. Insana was the president and CEO of Insana Capital Partners, a $120 million fund of funds manager, from March 2006 through August 2008. For over two decades, Insana has been a familiar face on business television, spending 17 years as a veteran anchor at CNBC. Before working at CNBC, he worked as managing editor and senior anchor for the Financial News Network, where he began his career in 1984 as a production assistant. He graduated with honors from California State University at Northridge.

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