The EU rescue package is not unexpected given that the memories of the ripple effect from the closure of Lehman's is still fresh in the mind of many Governments, policy makers and investors.  So while the more than US$1 trillion gives us reason to cheer - we should expect a  bumpy road ahead as this package still needs to be approved by the parliaments of the individual EU members. This could be difficult and we already see a potential change in Government in Germany because of this.  This reminds me of the difficult road that the Obama Geithner package had before it finally went through the US Senate and Congress.

With this announcement which came around the close of trading yesterday, markets had a huge rally fuelled in part by short covering.  Our own STI Index was up close to sixty points yesterday in a "blue chip" rally but the volume was light. I expect the momentum to continue today and will be watching the volume - if it remains light than investors should be cautious as its more a relief short covering rally.  Medium term, I remain positive and with the VIX decidedly down from more than 40 to 28.8 overnight, I think medium term value investors can start to dip into stocks again once markets stabilise.  We are mid-way into the results season and I will be looking out for companies which beat forecasts and give strong forward guidance.  As I highlighted before, the tech sector seems to be where this is likely to happen.

On what to BUY, you can look at my Stock Picks - the stocks which havent really moved or which have retraced in the recent correction include ASTI, Hisaka, Broadway and China Animal Healthcare.  For investors who like a healthy dividend yield, Innotek and AEI can offer this on a one year view.  Read more about each stock in my Stock Pick section including my price targets.