Although the market was set up for a classic sell the news reaction today and we were by no means surprised when it started to take shape, we doubt that anyone was expecting it to be as violent as it was. While there were few who were expecting that Secretary Geithner would deliver a whole lot of specifics, the so-called plan lacked any sort of detail whatsoever. In fact, he spent most of his time discussing how we got in the mess we’re in, not how we’re going to get out.
After the intense selling right as the news came out, the market spent the rest of the day moving steadily lower, with the net result being that the Dow finished at its worst level since the November lows. While the technical damage in the Nasdaq and S&P 500 wasn’t nearly as severe, we obviously took a hit today, and it’s going to be hard for us to recover from it for awhile.
Of course, this puts us back right where we were a while ago, with the market wondering what sort of plan the government can come up with to properly value the toxic debt banks still have on their balance sheets, and get those same banks to start lending again. We know the folks in Washington want that to happen, but the feeling is that they just don’t know how to make it happen.
They will keep trying, but the only thing that’s really going to help is time.
In the meantime, we have a market that is in a precarious position. The bulls really need to step up to the plate, but it’s unclear what’s going to provide the catalyst for them to do so.
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