Monday Morning Musings
The market tried to bounce at the open, but quickly sold off again. There is a real tug of war going on between the bulls and bears. The market is highly oversold, and the put/call ratio is near all-time record levels. But the bears don't want to give in here, as they are still trying to crush the spirit of the bulls.
Per that point, I am starting to hear more people finally throw in the towel and call for more downside before the market finds a bottom. That is a necessary contrarian ingredient, and makes me more bullish for a bounce. I have increased my longs this morning, as well as taken some new trading positions.
It would certainly help if the brokers could finally bottom, but the pressure there is immense. Merrill Lynch (MER) was upgraded this morning, as the analyst felt the fallout from the mortgage and credit business is mostly discounted. I feel the same about many in the group. And the COO of Bear Stearns (BSC) resigned on Friday.
Oil is down handily this morning, falling all the way back to $73. Bond yields are a bit lower again also, with the 10-year near 4.69%. Asian markets were lower across the board overnight, which isn't surprising given the way our markets finished on Friday.
Now let's get back to that oversold rally...