Top Line: The rally looked pretty good going into the afternoon but the market let much of it go before the close. The NDX (NASDAQ 100) did get up about 1.5% on the close and we would like to see a little more before its done. The Dow has been held down because of the proximity to the 12,750 line but here to we think that line may give way later in the month.
For now, we see very little reason to trade this market. The moves in both directions are weak and seem unsustainable. With the uncertainty built into countertrend moves in the first place, the market will try to confuse the most people during that period of time.
The market pretty much convinced everyone it wanted to go down with all the bad news about Bear Stearns and the dollar a few weeks back. The news did not really change all that much since then but the market has enjoyed a bounce even though it is currently a stalled bounce.
As we look to the near term future, there are very few options for investors. Traders who are willing to take a little risk can profit but should remain nimble and take profits quickly. We could be wrong, we all know we have been before, but we still think the next down move will literally wipe out many players and we do Not want to be around for that.
We have said that the news will continue to look bad and confuse those who have been convinced of a bear move. This has happened as the Dow has rallied about a thousand points with no real solidly bullish news to justify it. You may think the Bear Stearns buyout is bullish but it's only so because of the players involved, not because the news is very good.
The politicians would like us to believe that the world can be "fixed" but there can be no good fix that is not inordinately expensive. The problem can not easily be solved, there will be more pain and it will be spread around to all of us.
The best article of the day comes from one of our favorite reads, Glenn Beck. His latest contribution compares America to an alcoholic who needs a 12 step program. It's a good read if you haven't seen it.
FSI: 79.55 (not quite back to 80)