When is bad news not so bad? When it is not as bad as expected. Bank of America announced that it will take about $3 billion in credit-related CDOs and set aside an additional $600 million to help support money market mutual funds. This would have been extraordinary at any other time. The fact is people were expecting worse. Much. Still, the news may not be fully "out." The bank noted, as if it had to, that valuations of CDOs remain locked in something of a blackbox. There is no model that can really predict values at the end of the fourth quarter. Most assume the top banks will have more troubled assets to account for. So the stock rally may have been relief more than anything.  

For more:
- here's a New York Post article