Well, if the market will not stabilize until the passage of the bailout package, then the longs may have some down to endure. It is clear that Congress has some reservations about a request coming from an administration which does not have an attractive record when it comes to correctly interpreting pertinent information. What is more concerning for the market may be that, whether or not the bill is passed, how much de-leveraging will continue to appear in the form of selling in the stock markets. If in fact stocks, at current levels, are in essence cheap and are being subsidized in price under the proposed federal bailout, then a major pricing rally is about to begin. If however there is a significant readjustment occurring in values which must match up with falling real estate values, then exactly where the bottom may be vexing.
The bailout is such a large target as not to be missed by the participants who price or attempt to establish a value area for a given traded contract, stock, or option. So far, the price action has been horrible. Markets many times, not always, reflect their closing price action. Many traders make a living on closes. This market does not close like a bull, yet. Last Thursday and Friday had the makings of that type of action but that has faded. This market cannot sit here at these lower levels much longer without becoming a bear raid victim.
