What a frustrating day in the market. We almost did it. We almost had a wash and then maybe hopefully a lower open on Monday that you can play as a bottom for names you like on a fundamental basis. Instead we get gibberish. Huge midday buying spree indicated that people are to trigger happy to buy, there is still not enough fear. That there is hope that still abounds despite the lip service to we are all bearish. I am not saying we will not have a rally and even finish up next week. What I am saying is that I think there is little chance for a long sustained bounce based off of what I saw today.
The "news" that seemed to shoot the market up was that supposedly Bernanke indicated Freddie and Fannie could access the discount window. Two things, first we might as well open it up to anybody and everybody. The discount window seems to have become the popular hooker shared among Wall St bankers. Secondly and much more importantly, who cares!!! THIS IS NOT A LIQUIDITY PROBLEM!!! It has not been a liquidity problem since at least January. Freddie and Fannie have plenty of liquidity. Lehman probably has ample liquidity. There are major solvency issues that opening up the discount window does not help with. The fact that people would still buy on this shows that there is still a lack of understanding of the true problems in the system.
So this little piece of news sent the market skyrocketing and the VIX plummeting. The market then sold off after a massive 270 point rally and the VIX barely retraced its losses indicating people were okay again. The world was fine.
It is just frustrating. There is not a great way to play this. You know you are way way oversold. You also know the market (at least in my opinion) is still overvalued and that the market is not respecting the potential problems in the economy and the financial system. You stick with fundamentals but right now everything is getting bought at once or sold at once and fundamentals are not meaning all that much.
The battle becomes then to grind in motion avoiding losing money.
Sunday I am flying out to look at a company in San Diego. Won't be back until late Tuesday night. Not sure how much time I will have to post anything. Monday will be an interesting day though.