Markets ran out of gas today. Bernanke said he would accommodate should the need arise and that continued weakness in the financials would have to watched closely. Great whining could be heard from the bulls since there was no jolly talk or guarantees as to the duration of the vetting process of current bad positions by those holding them.
Clearly the market is trying to put the worst behind it, but there is this nagging fear of a severely weakened economy due to the tremendous hit the real estate industry has taken. The hope has always been that the sub prime mess would not leak into the good paper, but Bernanke hinted today a significant case of ugh may appear in the months ahead.
The bears believe it is a matter of time before the indexes test their lows since the reality of bad price action will crush current rationalizations about cheap values. The bulls believe there is a strong bid under the indexes based on demand created by a cheap dollar and strong balance sheets. Whatever the case, the greater opportunities will present themselves for those not so committed to trend.
