All numbers point to the fact that U.S. recession ended in July. Yesterday, Fed Chairman Ben Bernanke said that the recession is likely over. Unemployment rate is still high, but with all the euphoria about rebound, companies may start their hiring aggressively. We may see the decent employment rate by Q1 2010.

In a related news, Federal Reserve said today that output at the nation’s factories, mines and utilities rose 0.8 percent in August. Economists surveyed by Thomson Reuters expected a 0.6 percent increase. Last month’s gain marked the second straight increase which is another good news in this economy.

Related Link: U.S. Industrial Production better than expected

Yes, for the near term. Dow leapt 497 points. S&P 500 soared 7.1% to 822, its biggest gain since October 2008. Geithner’s plan will benefit the financial stocks, so obviously all financial stocks went up dramatically yesterday. Wall Street is happy that somebody is going to own the toxic assets and banks don’t need to worry about those bad assets anymore.

Did we just cross the bottom? I don’t think so. For starters, fundamentals are not changed. Unemployment is still the same. Existing home sales improved a little bit. February sales increased 5.1% month to month to a seasonally adjusted rate of 4.72 million. Economists expected a 0.9% decrease to 4.45 million. This number may be misleading because of high number of foreclosures across the country. What I mean is that although the number of sales is improved, you have to look at the quality of the sales. We will get the report of new home sales on Wednesday. That may tell the true story of what is happening in housing market.

Overall the market has positive bias. Major corporations are scheduled to announce earnings in the coming weeks. Market will change the direction depends on the quality of the earnings. Walgreen missed earning estimates yesterday. Jewelry retailer Tiffany’s reported slightly better earning but its revenue fell 20% year over year. It also issued downside guidance for current fiscal year. We have to look for earnings from Citibank, Bank of America, JP Morgan Chase, Goldman Sachs and Wells Fargo to get an idea about the health of the banks and also to gauge the effectiveness of stimulus package. Earnings from GE, Caterpillar, P&G, Wal Mart, Merck, General Motors, Home Depot, Microsoft, Hewlett Packard, Cisco and Intel will also give us the better picture of the overall economy.

Volatility index VIX closed down 2.66 points to 43.23, which is still well above the 200 day moving average. The relative strength indicates that there is still some support to the bear market rally argument and there is still some fear in the market.

As always trade wisely and use stop losses.