The Freddie Mac and Fannie Mae bailout got a lot of folks excited this morning, but it triggered plenty of selling as well.
Some late-day buying helped to bail out the bulls who were losing traction most of the day, but it was a very mixed day with some notable underperformance in the Nasdaq due to weak action in big-cap technology stocks. In addition oil and commodity stocks were under considerable pressure once again, but financials, retailers and homebuilders kept the DJIA and S&P 500 solidly in the green.
Some of the pressure on the big-cap technology stocks is being attributed to funds like that run by Bill Miller, who had big positions in FRE and FNM. These funds are taking huge losses on FNM and FRE and are forced to liquidate other holdings as well in order to meet redemptions. That is one explanation out there that may have some validity.
So now what? Is this really an early-cycle bull market in retailers and homebuilders, or is this just bear market bounces in some beaten-down sectors that will fizzle out as the excitement over the bailout cools off?
Many are not feeling the love for this market. Some chartists don't see much worth buying. Is this another dead-cat bounce?
It's a strange mix out there right now, and that is going to keep things very tricky - beware.