In a sign of how perverse and debased the market’s reactions to simple news has become, NCC (NCC), the large regional bank, dropped from over $4 last Friday to $1.36 on Monday. Today, the shares change hands at $3.50.

There has been no news about the financial firm to account for either its fall or resurrection. Rumors about credit and bank runs took NCC down despite comments from several brainy analysts including Oppenheimer & Co.’s Terry McEvoy. He upped his rating to "outperform" when trading opened at the beginning of the week.

The frenzy around NCC caused Moody’s to say it might downgrade the bank’s debt. It was a cowardly act based on the sell-off and the credit agency probably wishes it could take its announcement back.

The theory that took the stock down and then helped it move higher is that the bailout package will be good for NCC. Of course, no one other than bank management knows how much toxic paper the firm has to unload. The amount may be very modest. If the package makes it through the House, NCC may even go back to over $5, where it traded three weeks ago.

NCC is not alone. Wachovia (WB) and several other banks suffered the same gyrations. The panic got brutal. Many depositors and clients probably did pull out of these institutions. If the rate of attrition had been great enough, NCC or WB might have failed. In either case, it would have been without good reason.

The real high-stakes gamblers in the market probably played the sell-offs and buy-ups by watching suckers move in and out of the bank shares. They made a lot of money in a very brief period of time.

Douglas A. McIntyre

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