Been scanning the horizon for a true multi week multi month bottom with 15% plus type of rally that seems almost inevitable after weeks of stock selling and it is still not clear that it is coming. I thought it could start this week with some positive resolution coming out of Europe. That dd not happen and instead the reverse occurred and the market has gotten creamed (even after factoring today's rally).
You need something for traders to latch onto for this type of rally. I thought the two most likely candidates would be an European solution (really it would just be a band aide) or a change in mark to market accounting. So far neither have materialized and may not materialize but there is growing evidence that we may be moving that direction.
Europe is working painfully slowly towards there band aide. I think this will get resolved by the IMF not Western Europe. All it will do will be to buy time. It won't fix anything.
This was reported today and got a little buzz.
A U.S. House Financial Services subcommittee plans a hearing on mark-to-market accounting rules, which have been blamed for forcing banks to report billions of dollars in write-downs, a source briefed on the matter told Reuters on Wednesday.
The subcommittee on capital markets has tentatively scheduled the hearing for March 12, the source said.
This is a subcommittee and it isn't until next week. I don't think this will develop into anything quickly.
However, one obstacle is gone and that is the recently departed chief accountant for the SEC who stood strongly opposed to the removal of FAS 157.
"I think that mark-to-market does help the investor," Hewitt continued. "Mark-to-market brought to focus the problems we have had in our financial institutions much faster."
That describes why the realization of Europe's mess is still ahead of them. Our accounting revealed more than their accounting earlier. American banks raised something like $400 billion in capital before the private markets closed shut. Europe raised very little because "they didn't have a problem." Article continues:
Under the Troubled Asset Relief Program, the U.S. Congress mandated the SEC to complete a study of fair-value accounting.
However, Hewitt said Wednesday the SEC's recent study of fair value accounting was done as "a compromise," and that he believes that politics should be kept out of accounting standard setting. The study, released in December, concluded that mark-to-market accounting was not a major factor in 2008 bank failures.
Influential business groups like the Business Roundtable and the American Bankers Association continue to urge the SEC to suspend or significantly alter mark-to-market accounting.
The coming hearing is probably a direct result of some of those influential business groups.
So I am scanning the horizon for something to call an interim bottom on but not seeing anything yet. Just spec's. Of course it could come from something I am not looking at (alot of buzz on China recently).