On Monday, U.S. stocks rallied sharply into close, pushing the Dow Jones Industrial Average above 9,000 after signs emerged that the credit markets are thawing and Ben Bernanke said he backs another fiscal stimulus.

The Dow rose 4.7% gaining 413.21 points to 9265 was its fourth best day of the year which of course picked up speed in the final hour. the blue-chip index’s first close above the 9,000 level since last Tuesday. The S&P 500 Index was up 44.85 points, or 4.8%, to 985.40. The Nasdaq Composite Index gained 46.81 points, or 2.7%, to 1,758.1.

Today traders will again be watching for progress in the credit markets, where the trickle from a slow thaw has been enough to end the drought of buyers in the stock market. There is also a long list of companies reporting earnings before the market opens, including Dow components 3M, Caterpillar, DuPont and Pfizer.

Financial companies which are reporting today include BlackRock, State Street, Fifth Third, National City and US Bancorp. Drug maker Schering Plough and Biogen Idec also report. After the close, Apple and Yahoo are reporting.

It may be a bit early to say that this market has reach a bottom but the collective comments of pundits certainly point to the likelihood that a market bottom is near. That is, if they are right.

It may be anecdotal, but it was encouraging on Monday’s session to see that research analysts were more actively looking at upgrading stocks, based on valuation. For instance Oppenheimer put a buy on a list of energy stocks, saying the upside potential outweighs the decline in oil prices. Energy stocks rose 11%.

Having already passed one piece of legislation to rescue the housing sector, the government appears ready to embrace a bigger and more costly plan, hot on the heels of its historic efforts to bail out financial firms.

The push for another housing rescue plan comes amid growing calls for a second economic stimulus package. Federal Reserve Chairman Ben Bernanke backed the idea during his testimony before Congress on Monday.

But economists say the best bang for the buck will come from helping housing, not another tax cut or extended unemployment benefits. That’s because home prices, much like stock prices, fundamentally affect on people’s sense of wealth.

“The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it” - Ronald Reagan, 40th president of US (1911 - 2004)

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After stocks rallied into the close last Thursday with big gains, as bargain hunters stepped in following initial losses on data releases showing drops in factory output. The Dow Jones Industrial Average climbed 401 points; the S&P 500 added 38 points and the Nasdaq Composite rose 89 points.

Extending to trade higher on Friday but stocks dip into negative territory erasing all its gains as investors take profit in the late trading session ahead of the close, with the major indexes ending with daily losses but up for the week, capping a volatile streak involving wild swings in either direction amid signs of a possible thaw in the credit markets.

The Dow Jones Industrial Average lost 127.04 points, or 1.4%, to end at 8,852.22, with a weekly gain of 4.75%, and marking its first up after four week of downtrend. The S&P 500 Index fell 5.87 points, or 0.6%, to 940.56, up 4.6% for the week. The Nasdaq Composite Index shed 6.42 points, or 0.4%, to 1,711.29, up 3.7% from last Friday’s close.

The Dow Industrials has shown some significant moves each day over the past two weeks with swings of about 10% from its session low to session high.

On Thursday, the CBOE Volatility Index spiked to a record high in unprecedented territory, crossing 80 for the first time intraday to end the week at about 70.

History, however might give some clues as to when the volatility will settle down. The chart shows how the VIX trends over time after spiking. The higher the VIX, the quicker it falls back but at the levels now, it may still be here for awhile.

The Dow is down over 37% from its market peak on October 9, 2007 of 14,164.53.

The S&P is down almost 39% from its peak of 1565.15 on October 9, 2007.

The NASDAQ is down almost 39% from its peak of 2859.12 hit on October 31, 2007.

High volatility should be expected in the coming weeks, whipsawing the markets as efforts to rescue the embattled financial system in the face of global recession is the main concern.

“It’s a recession when your neighbor loses his job; it’s a depression when you lose yours” - Harry S Truman, in Observer, April 13, 1958. 33rd president of US (1884 - 1972)

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On Tuesday, U.S. stocks traded lower after a 936-point Dow rally on Monday which was the best stock market day in 75 years as cheer over the government’s plan to invest billions in banks. International effort to thaw the credit freeze may have given the markets a temporary jolt of confidence but worries over the strength of economy have deter the bulls from going further.

The Dow Jones Industrial Average surged as much as 400 points early on but then losses steam and started falling off, from positive to negative territory at its session low, down nearly 300 points. A 700-point swing to finish at 9,310.99 down 76.62 points, or 0.8%, with 21 of its 30 components ending in the red. The S&P 500 Index fell 5.35 points, or 0.5%, to 998.01 and the Nasdaq Composite Index was down 65.24 points, or 3.5% to close at 1,779.01.

While the market is still wildly volatile, traders may be ready to start paying more attention to the third quarter earnings as the season has just started shifting their attention slightly from a deep obsession with the credit crises.

Traders will be watching closely to J.P. Morgan, Wells Fargo and Coca-Cola, reporting their earnings before the market open today. Attentions will be on Coke as rival Pepsico disappointed with an earnings miss and and lowered forecast on Tuesday.

Important economic data to focus on ahead of the bell are retail sales for September, a read on the consumer’s willingness to spend, is reporting at 8:30 a.m. The producer price index (PPI) is also reporting at 8:30 as is the Empire State survey. Business inventories are scheduled to be release at 10 a.m. While the Fed will be releasing its beige book on the economy at 2 p.m.

While the U.S. government is offering to take $250 billion worth of stakes in nine top banks to prevent a banking meltdown, it can’t prevent the economy going into a recession. The fact is that the markets quickly turned their focus to the economy as shares turned lower in Wall Street trade yesterday.

European leaders will meet today for an overhaul of the world’s financial structures after Asia joined western bastions of capitalism in bailing out banks to avert a financial meltdown.

“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs” - Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802) 3rd president of US (1743 - 1826)

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