Today’s action was very telling. When oil broke it set up the potential for a strong snapback rally. That rally materialized within minutes as expected. However by the end of the day most of the rally faded away. Today’s action is suggesting that the bear just took a bite out of another sector with no benefit to the rest of the market. Thinking logically, just because oil breaks it’s not going to cure any of the problems in the banking sector. It’s also not going to turn the recession around in its tracks. What I didn’t know was whether the market would respond logically or irrationally. I think the time of irrational actions is probably over. I think we are now fully into the period where we are going to have to pay for the excesses that have built up since 1987.
I'll have a lot more to say in tonight's update.