Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Ambac Financial Group (Nasdaq: ABK) shares popped 16% in intraday trading today as the market speculates that mortgage insurers will be able to "put-back" private mortgage insurance on big banks.

So What: Attorneys general in all 50 states have agreed to investigate whether banks and other lenders used illegal documentation on foreclosed properties. Traders think this will give mortgage insurers leverage to put-back the claims against them to big banks, causing today's big move.

Now What: Today's news has driven Ambac up especially hard because of high short interest in the company. This could be the start of a longer move up if the states find cases against the big banks and Ambac is able to limit losses. The short squeeze is on hard today, but until I see more clarity and a sound business, this long-term investor will be watching from the sidelines. 

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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his Motley Fool CAPS picks at TMFFlushDraw. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Fool has a disclosure policy.