Uncertainly over the structure of a "big bang" bank bailout jerked the market around sharply today. Financials tried to turn up after two days of weakness, but concern over how equity holders will fare under Geithner's plan weighed heavily on Bank of America, and that undermined the early positive sentiment. We did have some strength in oil, steel, gold and even semiconductors, but without some clarity as to banks, market players are quick to flip into strength and keep us contained.
If you take a step back and look at the bigger picture, we are clearly stuck in a trading range with plenty of overhead but some decent support. There is no way to have much conviction one way or the other, but one thing for sure is that this isn't a bull market, and we can't even manage to put together a very good bear market bounce so far.
A lot of folks are rightly concerned that the much-anticipated bank solution next week isn't going to restore much stock market confidence. As some of the information leaks out, it doesn't sound like anything new or innovative.
The market is always looking forward, and if this plan was going to be embraced as highly positive, we'd be rallying more now, rather than experiencing this weak action. The market isn't buying it, although some market players are trying to play the spikes caused by periodic bouts of hope. It is that hope that is keeping us from falling into the abyss. That is what a trading range is all about, so we'll see just have to wait and see how it resolves itself as more concrete news is released.