Market Action

I have gotten away from writing about market action because it really doesn't matter and I don't trade on it. I do enjoy watching it though and today was so incredible I thought I would write down a couple of thoughts. WOW is all you can say. There were 3 to 4 individual news pieces that I thought would have sent the market down 50 points or more by themselves. Instead we get them all together and get a 225 point plus reversal with the market finishing up 90 points. It was one of the strongest bullish trading action I have seen in months. What is so confusing is that I thought yesterday was one of the worst bear actions in the market I have seen in weeks. I mean you had two incredible strong days in overseas markets followed by an 150 move up in the Dow only to have a full retracement finishing in negatve territory. I thought it was incredibly bearish.

So what is going on besides the random walk that rules the short term. Who knows but I have a couple of speculative thoughts. One, yesterday's action was the first trading day after the options expiration so you may have had a repositioning of the markets that did not mean as much as I thought it did. Today I had to think awhile longer to come up with a hypothesis. The only good news at all was the Hewlett-Packard earnings release but that alone should not have propelled the markets. Maybe, just maybe, it was the Bill Ackman news that gave a counter proposal on how to split up MBIA and Ambac. http://www.marketwatch.com/news/story/ambac-mbia-short-seller-proposes/story.aspx?guid=%7BC92741BA%2DE950%2D4E0A%2DA326%2D84C77C2FD826%7D This plan though still not good for MBIA and Ambac shareholders, appears that it may be a better plan than others have proposed in helping limit the writedowns the banks would experience. As the regular readers of my blog know I am putting huge importance on direction of the market over the next few months on the outcome of these guys. The first securities that started to trade in the positive territory was the financials. The market may have ignored all the bad news today after seeing yet another proposal that could be better than anything else proposed for the monolines.

Who knows but like I said, I like thinking about it.