11/15 For Hedge Fund Redemptions? (Maybe More On That Later)

Despite the early enthusiasm and big gap at the open, the action today left a lot to be desired. Early in the morning, it was looking like news of a Chinese economic stimulus package and a new bailout plan for AIG would allow the market to continue to recoup more of last week’s losses, but sellers began to move shortly after the open, and didn’t give up for the rest of the day. That said, the losses weren’t that large in comparison to the moves we’ve been seeing lately, volume was relatively light and the indices were able to hold above last week’s lows.

That means that the market is still in a position to put in a higher low, but as we’ve been saying lately, while the technical action may hold promise, we need to wait for real proof that conditions are improving before we even think about putting our capital to work. Not to mention the complete lack of leadership. Until we start seeing certain areas or groups make progress to the upside as a whole, buying individual stocks is going to remain difficult.

The bottom line is that we are still in a severe bear market, and there’s no reason to take as gospel the notion that we can’t go any lower. We might be in to process of bottoming out, but so far, there’s been no real indication that we’ve seen a major shift in this market’s character.