We're Saved, For The Moment (I Think)

The Obama administration has made several comments lately to the effect that they are not concerned about how weak the stock market has been following the release of their various economic and banking plans, so it was interesting to see how they released (as they are wont to do) news today just as the market was on the brink of breaking down again. If it weren't for some comments from the White House press secretary about how the Obama administration likes private ownership of banks, the indices were ready to break some important support.

We are saved for the moment, and there are even hints of some more details on the bank plan next week. With technical conditions oversold and sentiment so negative and gloomy, that may be all we need to give us a bit more upside.

A number of folks, such as Art Cashin on CNBC, are looking for a big bear market bounce here soon. That may be possible if we have the right news flow and stop reacting in such a spiky manner to every new piece of information. The buying we are seeing isn't from a foundation of confidence. It is just daytraders doing their flipping thing. There certainly isn't anything wrong with that, but it does not provide the sort of technical setup that allows us to build good-size positions. Many traders have no interest in holding positions overnight with the market as unstable as this.

One of the big problems we have in this market for the longer term is that even the bulls aren't that confident we will not see anything other than a short-term bounce. They aren't buying for the long term, and their inclination to take gains fairly fast is going to keep plenty of overhead pressure on the market.

We'll see a big short squeeze for a day or two here soon, and there will be some panic from underinvested bulls who they are missing out. Hopefully we'll have at least one good tradable rally in the near term, but as soon as the serial bottom-callers start proclaiming that the low is in again, is that a signal to sell?