Although it was looking like we were going to have yet another miserable close, a late spurt of buying helped the major indices finish off the lows of the session and essentially unchanged for the day. Still, the fact that this morning’s GS / Warren Buffet news didn’t generate much action to the upside despite the oversold conditions is certainly noteworthy. Meanwhile, even though the passage of some sort of bailout legislation is looking more and more like a real possibility, this market is still obviously skeptical that any such action will improve the conditions in the broader market and do much to help the overall economy.
The bottom line is that this market is getting more and more difficult to trade. We suspect that the SEC’s ban on short selling is exacerbating the randomness of the action, but the fact remains that market players are operating with shorter and shorter time-frames. It might be better if we could just experience one big woosh down, but at this point that’s just wishful thinking. Instead, the likelihood is that we are just going to have to continue to sit on our hands as we wait for all of this turmoil to play out.
The thing, though, that we need to keep in mind is that conditions will eventually improve, and those of us that have been able to patiently wait for better days and not fight this action will be in a position to benefit tremendously.