The market dodged a bullet yesterday doing what it does best when pushed sharply to the downside: Look for a life savor in the rumor mill. It eventually found one in the form of news of a possible bailout for bond insurer Ambac Financial Group. At this point it’s only a rumor, but it helped the market, with the Dow down some 220 points, to reverse course and only end up down 45.
Adding to weakness early in the morning were Fed Chairman’s Bernanke’s comments that more needs to be done to help troubled homeowners. His suggestions ranged from using loan modifications like lower interest rates, to an extension of the maturity of the loan, or even a write-down of the principal balance.
Yes, you read that right; I did not make this up. To hear the Fed chief make these kinds of suggestions tells you how bad things are in bubble land. Do I detect a bit of desperation here?
Be that as it may, the markets ended up mixed for the most part on day where another sharp sell off a la Friday was a distinct possibility. Here’s how our Trend Tracking Indexes (TTIs) fared:
Domestic TTI: -0.51%
International TTI: -8.57%
We’re still staying away from both of these markets and are hanging on to only a few sector positions. Many sectors have had their bull market for a while, and I will be watching closely with my trigger finger closely wrapped around our sell stop points.