Drunken Sailor

I have to jet but a couple of quick things. Today is where the market gets its random walk reputation. The last couple of days it just stumbled around like a drunken sailor not knowing which way to go. In my mind, today fundamentally it should have be down today after Bernanke's speech and the treasury market action. The Fed seems to be giving up the fight it can save everybody which should be a negative for equity prices. Either way this is a normal consolidation pattern you see after a huge drop like you had on Friday. The fact that the market has not been able to even give a modest rebound seems to me to be very bearish. Who knows though maybe that bounce is still coming.

Volume was back to the light side after two days of heavy volume (compared to the last two months). The AAA ABX tranches are getting crushed. They are about to break there March lows. The AA tranches and lower already have. Capitulation that this has been in fact a bear market rally seems to be around 1350. Everyone is talking about that would be the 50% reversal point from low to high. You break that and the last bulls may give it up (for like a day) the fight.

I am off to Austin. Have a great evening.