And once again, just when the market was on the brink of a major meltdown, we have news released of another governmental program to fix our economic ills. The latest plan involved a standardized approach to writing down mortgages as well as payment supplements.
As usual, the announcement came in the last hour of trading, just as we had broken intraday support. You might think that there might actually be some market-savvy folks in the Obama administration timing these things, but we all know that can't possibly be the case.
The shorts were obviously caught by surprise and helped to fuel a euphoric leap that put the S&P 500 in the green after being down nearly 3%.
I'm sure there are some traders who are gleefully navigating these wild intraday swings, but there are many more who are frustrated with the suddenness and randomness of these moves. This trading is more akin to playing a slot machine than any sort of thoughtful speculation.
In the bigger picture this sort of intraday reversal is a technical positive. The bears are squeezed, and the underinvested bulls are worried that it might continue without them. The bulls have a chance to run a bit on this, but the history of these big jumps on talks of governmental plans has not been good.
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