what possibly lies ahead for the markets

here are some considerations that could buttress the markets and/or suggest that the current issues could be in the process of being discounted in the markets, forming the basis for the potential for a more constructive view in the days/weeks/months ahead after the panic subsides:

* the curative and clearing process, addressing many of the financial institution's capital issues, has been under way for months. though the 3 stooges of 21st century finance - president, fed and treasury - have been timid and unimaginative, last week's actions by the fed and the rescue of bsc are a start in the right direction. the immediacy of the situation is being addressed - and the need for outside-of-the-box solutions (like investment banks' access to the discount window).

* we are probably bottoming in housing. some permutation of the barney frank/fha proposal seems inevitable, particularly in an election year. regardless, home prices are finally descending at an accelerating rate, and the more realistic prices will no doubt begin to attract buyers as credit availability stabilizes.

* corporate balance sheets are in great shape and should buttress the current credit issues.

* sovereign wealth funds remain flush (though relatively uncommitted) and stand ready to commit opportunistically to shore up capital of some of our largest financial institutions.

* the yield curve's steepening could, in the fullness of time, incent banks to take more risks.

* corporate profit expectations are being pared quickly and are catching up to many downbeat projections. more importantly, unlike prior recessions, the credit problems are not trickling into other market sectors.

* over the last 50 years, job losses (a lagging economic indicator) have coincided with economic stabilization and a positive turn for equities.

* stocks have declined by 20% within a six-month period for the fourth time in a quarter of a century (1990, 1998, 2000). in the 12-month period following the 1990 and 1998 corrections, stocks rallied by 34% and 39%, respectively. the 2000 correction, however, begot a full-fledged Bear Market.

* unlike previous bear markets, equities were not the subject of speculation at the top; commodities, residential and non-residential real estate, and private equity were.

* if corporate profits avoid a major slide in 2008, stocks are inexpensive relative to short- and long-term interest rates. indeed, with a seeming bubble in the bond market, a broad reallocation of assets out of fixed income and into equities seems possible.

* the negativity bubble now appears so inflated that it could be ready to pop. for example, the equity-only put/call reached an all-time high on friday, the investors intelligence (of market letters) survey showed bears rising to levels not seen in six years and demonstrated one of the sharpest weekly increases (to 43.6%) in years, the aaii survey (of individual investors) came in at the largest level of bears (at 59%) in nearly 20 years, and the consensus survey of futures traders were (only 23% bullish) at the lowest levels seen in over five years.

i think we'll see the market tell us what's happening very soon - within the next 2 weeks at the latest.