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I wanted to throw up when I heard the financial channels sensationalize yesterday’s market decline. We heard comments like;
“President Bush said he would talk to Treasury Secretary Hank Paulsen about today’s market sell-off”.
“Bernanke will undoubtedly get a lot of questions about the sell-off in his testimony to congress on Wednesday”.
"Worst percent drop since March 24, 2003".
AP Photo/ examiner.com- I don't know if this guy is upset over the market decline or if he hit his head on the computer monitor.
If you were going to get answers straight from the horse’s mouth, Paulsen and Bernanke would be the one’s to ask. They are after all members of the “Working Group on the Financial Markets” (aka-Plunge Protection Team).
If the President does speak with Paulsen about the markets, he needs to ask about the “mysterious buyers that have materialized in the futures markets”- (Jeff Saut/ Raymond James) since the July 2006 lows.
After yesterday’s close, the Dow is still up 1514 points from the lows set in July, a gain of 14.15%. To put things in perspective, yesterday’s 416 (3.3%) point decline was a pimple on an ant behind.
Yesterday was nothing more than a long overdue correction to a market built on hype, margin, and investment money from the yen carry-forward trade.
The biggest surprise yesterday was the supposed glitch in the electronic order entry system. While this may be the case, it sure looked like a huge margin call hit the market all at once yesterday afternoon.
Going forward, the market will attempt some kind of rally for a day or two. Typically, when markets close at or near the lows, a re-test of those lows usually occurs.
I am not expecting today to be the start of a new move to higher ground. Reversals of a trend usually occur in the midst of a large sell-off.
For those of you who are still hanging on to the market hedges; Rydex Tempest 500 Fund (RYTPX), or the ProFunds Ultra Short S&P 500, we may see 11,700 on the Dow before this correctional phase is complete.
