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 (NYSE: ABK) shares are up 10% today, continuing a rally we saw yesterday.

So What: The trade of yesterday has become the trade of today as investors go long mortgage insurers and short banks. This has driven Ambac shares up and has driven much of the financial sector lower today.

Now What: When attorneys general announced they were looking into mortgage foreclosures, the short squeeze was on in Ambac. Call options drew more than 10 times the normal volume yesterday, and the trade higher is continuing today. MBIA (NYSE: MBI), another big mover yesterday, is down today. I see this as a short-term bump in Ambac until short-sellers get out and we get more solid news.

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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.

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