is this a dream? i'm on the floor wamu's preferred and coomon stock still trading?this is beyond belief. WaMu Preferred Shares Worth Watching By Dan Freed 01/05/10 - 09:20 AM EST 1 Comment Loading Comments... Add Comment Stock quotes in this article: WAMUQ.PK , WAMPQ.PK , WAMKQ.PK , FNM , FRE NEW YORK (TheStreet) -- Recent trading in Washington Mutual (WAMUQ.PK) preferred shares may offer a greater clue to what is happening with the company's bankruptcy than the common stock. More on WAMUQ.PK WaMu May Get $2.6B Tax BoostA Financial Scandal for 2010?Washington Mutual: Five Questions Market Activity Fannie Mae| FNM DOWNFreddie Mac| FRE DOWNBoth preferred and common rallied massively Monday, but the gains in WaMu preferred shares suggest the outlook may have genuinely improved for owners of those securities. Preferred issues, such as the WAMPQ.PK, are now significantly higher than they were at any time last year. They rallied nearly 60% Monday to $93.01. Another preferred issue, the WAMKQ.PK, rallied 75% and are as high as they've been since WaMu was seized by regulators in Sept. 2008. Kevin Starke, analyst at CRT Capital Group, believes Monday's rally was a continuation of a pre-New Year rally following WaMu's filing of its monthly operating report, which showed it expects an extra $2.6 billion tax refund because of legislation enacted in November that allows it to use operating losses from five years ago, instead of just two, which had previously been the rule. There is some debate, however, about how much of that refund WaMu will actually get. While Zachary Prensky, managing director and founder of Little Bear Investments, believes WaMu will get the entire refund, CRT Capital's Starke argues it will likely only see 20%, with the rest going to JPMorgan Chase (JPM Quote). The two companies are involved in extensive litigation and the tax refunds are part of what is in dispute. Further complicating Starke's efforts to determine the size of the refund WaMu's holding company can expect is his inability to obtain 10-K filings made by WaMu's operating company prior to 2005. Starke says he has requested the filings from the Office of Thrift Supervision but has not received a response. Meanwhile, WaMu's common shares, which trade under the ticker "WAMUQ.PK," were up nearly 22% on Monday with volume running more than three times above the average daily churn over the past three months. More on WAMUQ.PK WaMu May Get $2.6B Tax BoostA Financial Scandal for 2010?Washington Mutual: Five Questions Market Activity Freddie Mac| FRE DOWNFannie Mae| FNM DOWNFor holders of the common stock, it's hard to know how seriously to take this rally. Sitting at the bottom of the capital structure, it's difficult to come up with a scenario where the common shareholders will see a payout when all is said and done. The volatility in the stock is nothing new, given that the common shares of many companies thought to be worthless have bounced around in recent months, fueled more by rumor and speculation than any substantive data.