Tuesday, November 11, 2008
Dismal, that is how you describe the market action today. It was bad across the board. Breaking 900 doesn't mean we are headed to new lows. What I do think it means is that either we are in a trading range or we will be testing the lows shortly. In my mind it took off the table my expect ion of visiting 1100 on the S&P in the next month or two. It was the first true lower low since the rebound started. What was even more interesting was that at 1:00 Freddie, Fannie, and the FHFA talked about this "new" loan modification program. The market rallied 270 points back to break even. I was working out and was like short that rally. We rolled over and went down 250 points before a slight bounce at the close. A couple of things. If the market was still in rally mode it would have latched onto that news. Instead it saw it for what it was, a selling opportunity. Loan modification program? Please, has been tried, doesn't have great success, and doesn't really change anything. Either way the market in rally mode tends to latch onto this things as something to buy. Didn't happen today besides the initial short covering. So with the break of 900 I don't really know where we are headed, my guess would be lower though not necessarily breaking new lows in the short term, but I do think you can wave goodbye to a truly big Santa Clause rally.