For the second day in a row, the market spiked up sharply on news of an upcoming mortgage bailout plan. This time the news was that President Obama will announce details next Wednesday.
Announcing an announcement of a government program is exactly what led to such a poor market response to Treasury Secretary Geithner's bank bailout program. Hopefully the difference this time will be that the mortgage plan will already be detailed and well structured.
All that we have going on in this market lately are reactions to government announcements. We spike up on some news, which always seems to come at key technical levels, sell off again, and then repeat. As someone noted on CNBC, you have to focus on trading the volatility rather than direction if you want to make money. This is not a market for momentum trading. There is a little bit of momentum in the gold sector, but most everything else is just a random see-saw.
Technically we are holding support and are back in the middle of a trading range. What is going to determine market direction is investor confidence or lack thereof. There is going to be plenty of governmental news again next week, which is going to influence confidence levels of many market participants.