Although they finished off the highs of the session and volume was rather light again, the major indices were able to finish the day with solid gains on breadth that was right around 2:1 to the positive. As we’ve been saying all day, the greatest likelihood behind the strength was that market players were positioning themselves for an expected rally once the bailout legislation is passed. The big question, of course, is if the market has already priced in its expectations of the event, or if we will see some more action to the upside before investors “sell the news.” In any event, few seem to expect this market to simply turn over a new leaf and simply start a new bull market. With all the posturing, debating and finger pointing, the thing that folks seem to forget is that only time will cure what ills this market.
There’s still plenty of uncertainty out there, and the economy is far from out of the woods, so even if the bailout package was necessary to avoid a possible financial meltdown, that doesn’t mean it’s going to be smooth sailing from here on out. Regardless, we are looking forward to all of this bailout rigmarole to be over, because perhaps we might get back to a trading environment that isn’t beholden to the vagaries of government officials.