There is nothing as bad as losing the money you had and nothing as good as making it back after you lost. Thus, on Wednesday [2009/09/30], the market rose 2% from low and you made it back. The contentment, the joy! And the almanaktarian's favorite day coming up, with a beaten favorite play to boot! But the cronies knew. Disaster. One lost what one had on Thursday [2009/10/01]. You see, we're in crisis mode. Unless the health bill is passed, those jobs will not come back; what we need is to prosecute Secretary Mellon or his modern counterpart the way the magnetic radio person did in the 1930s. On Friday, bonds at a one-year high, and the cronies took profits on the number. Someone has to pay. Let us hope that the seasonalists, almanaktarians, and followers of all stripes will fare better in another world where we will not meet them.
What if markets slowly begin to realize "hey, we have come out of the worst crisis in a 100 year with many scars but we are still on our feet," couldn't it justify a much higher valuation level (lower risk premium) for equity markets?
Wednesday shows how desperate bulls were to let the market regain the opening level. Their failure and frustration is quite evident during Thursday's action. On Friday they tried to close the down gap of the open, but they were much less aggressive. Maybe they are realizing that the market needs to move to much lower levels before attracting new buyers who are also now concerned with negative news and W, U, square roots shape recession scenarios… If this is true we should sell any rebound next week.
Its not over till it's over. The retail traders who have seen the minor dips since March and have jumped on to the July bandwagon (even if a bit late) would be seeing this as an opportunity to buy on dips. All lagging indicators as well as price is showing break of resistance trendlines and key levels. On the heels of bad to worse news, we still have not seen a correction in above 10% range. This is why I think, a hint of good news and we break above 10k on the Dow. Just when none of the retailer traders will expect, the commercial loan situation will come to fruition coupled with lack of topline growth, and the long-awaited bear run will start.