Bulls take control of historic, tumultuous week

Small-cap stocks steamrolled higher, putting a bullish exclamation point on one of the most tumultuous and dramatic weeks in stock market history. The Russell 2000 (NYSE:IWM) climbed 30.07, or 4.15%, to 753.74, bolstered by investor confidence that government moves to stabilize troubled financial conditions would save the day and put an end to recent firestorms that saw the 4th-largest investment bank in the country file for bankruptcy while the Treasury Department dashed in to rescue the world’s largest insurance firm.

For the week, the Russell was actually up 33.48, or 4.64% despite enduring the two largest one-day declines of the year Monday and Wednesday. It will probably come as a shock to many to know that the Russell actually posted the highest weekly close of the year on Friday, topping the previous peak set during the August rally. For the year, small-caps are down just 1.6%, while the Dow is down 14.1% and the S&P 500 down 14.5%.

Volatility reached manic proportions this week as daily ranges swelled to mammoth levels. Even a Hollywood action film would have been spent trying to keep pace with this week’s market action.

The strong finish this week suggested that investors were willing to buy into talk from the Treasury Department that a rescue plan would be able to gobble up mountains of bad debt among elite U.S. financial companies, re-establish credit lines, secure investor profits in money market accounts, stave off an economic recession, cure cancer and help all old ladies cross the road (okay, maybe those last two . . .

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