Testing August Again

Beginning to test the August lows this morning and may see a bit of chop as the indexes explore this support. More than anything, the sup-prime story is still being talked about and some of the market strength may be determined on whether or not the effects of the story are beginning to diminish. An overall worse case number has been examined by most institutions and now the test will be how a slow down in the economy will influence prime mortgages and other widely held debt. The bear's story is growing old, but if the of the underlying base of the economy has been so severely damaged, then a test of the lows should be rapid. Lingering in a trading range, building a base, waiting for stimulus validation, ultimately plays into the hands of the bulls.