After days and days of unending pain and false hopes of a bottom, the market finally roared higher today. If nothing else, it was a nice one-day respite from the steady drip of a melting economy. Of course, throughout this down-cycle we’ve had several monster rallies and they’ve never amounted to anything.

The big winners: The banks. After Vikram Pandit’s memo suggesting that Citigroup (C) was operating at a profit, they all roared higher. Citi itself was up 36%.

Other big winners: Big tech. Lost in all the news was Microsoft’s (MSFT) announced dividend hike to $.13 per quarter from $.11. It’s a modest amount nominally, but given where the stock was trading, it now pays a pretty juicy 3.4% dividend. It ended up over 8%, and the NASDAQ as a whole was up over 7%.

The final levels on the indices: The Dow ended up 379.44, to 6926.49, the S&P 500 added 43.07, to close at 719.60 and the NASDAQ gained 89.64, finishing at 1,358.28.

Clearly the market was due for some kind of vicious move upwards. Eventually the easy trade — shorting the banks day in and day out — was going to come back and bite the traders in the arse.

None of this means the market is “back” however, and there’s even a negative spin on the Citi news, which is that the bank is profitable merely because of the massive amount of help its received from the govermnent, lowering its cost of capital, potentially creating a competitive advantage over sound, healthy institutions. This is what Warren Buffett was referring to when he talked about the advantage of being a financial crippled in this economy.

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