ETF Update: Back To The Main Bear Trend?

Sell the news? The rally was phony? It’s back to the main bear trend? Was it just a hissy fit?
We won’t know until tomorrow probably.

TTT (Turbo-Tax Tim) delivered his bank bailout plan which didn’t cheer investors. It also didn’t square with the recipe posted yesterday via the BBC interview with former IMF economist Ken Rogoff. His prescription of placing banks in receivership has a “get it over with” message which is too bold for current White House insiders to swallow. They have friends on Wall Street who wouldn’t want to see their stocks vaporized. The pressure not to do this must be intense but doing so seems to be the ultimate solution.

The porkulus stimulus package, now passed with details yet to be finalized by conference committee, didn’t thrill investors either. Perhaps this was a sell the news type of event.

If the PPT is active in the market they surely would have shown up today to lend support to TTT, Bernanke’s testimony and the porkulus stimulus package.

Stocks cratered and investors scampered back to bonds, gold and to a lesser extent the US dollar. Volume increased and breadth was horrible.

Austin Powers didn’t demand enough from the world. Was this a complete wipe-out? It sure looks close. Any time you get negative +4% days, even if it’s just a “sell the news” event you have to question whether the emerging bullish trend was just another head fake. If you’re long, and we are some, it sure feels that way. If we’re just in a trading range then sucker rallies can happen frequently which is why it’s important to be disciplined and not heavily invested. You stick your toe in the water and you could lose your entire leg.

I assume that Ken Rogoff knows a lot more than me about what’s buried on the books of financial companies. His solution (receivership) is painful to shareholders of those afflicted companies and it seems the White House is taking baby steps. If Rogoff is right then we have a slow water torture process ahead of us.

Now I was going to post another regulatory issue but I was angered by this YouTube moment that sums up what’s going on in DC. Why don’t the American people care? To Chucky Boy Schumer it’s because they’ve been trained by him and his peers not to care. A pretty disgusting sentiment.

Let’s see tomorrow if they overdid things today.

Disclaimer: Among other issues the ETF Digest maintains positions in: QQQQ, IEF, TLT, GLD, GDX, XLE, EEM, EWZ, IFN and FXI.

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