Wall street is in a panic, but you already knew that. Main street, the Baby Boomer IRA holders, are also in a panic and threw in the towel yesterday. After the markets staged a brief rally leading into the final minutes, the "sell on close" orders swamped everything, pushing the DJIA down an additional 200 points at the finish. This type of selling pressure can probably be attributed to the squaring up of mutual fund sell orders at the close, I'm not positive but that's what I think happened. The boyz knew we would rally today and bought the close.
Who is to blame? John McCain said earlier in the fracas "I went to Washington last week to make sure that the taxpayers of Ohio and across this great country were not left footing the bill for mistakes made on Wall Street and in Washington," If we assume the idea was to pass the Bailout Bill, John McCain failed to deliver his party's votes.
Predictably, McCain is trying to cast his failure to lead his own party by blaming it on someone else. It stretches the imagination to see him trying to outdo Bush in the misrepresentation category. Isn't this how we got into this mess in the first place?
That old adage that statistics never lie...
Republicans 66 for + 132 against = 198 voters
Democrats 138 for + 95 against = 233 voters
Republicans vote 66/198 = 33.33% FOR
Republicans vote 132/198 = 66.67% AGAINST
Democrats vote 138/233 = 59.23% FOR
Democrats vote 95/233 = 40.77% AGAINST
Percentages of the Total Votes Cast (198+233 = 431)
Democrats 138/431 = 32.0% FOR
Democrats 95/431 = 22.0% AGAINST
Republicans - 66/431 = 15.3% FOR
Republicans - 132/431 = 30.6% AGAINST
The indecision pattern I mentioned previously, resolved itself sharply to the downside. The McClellan Oscillator is oversold enough for a bounce which looks like it will occur today.
Never the less, the 10% Index went well below -500 again indicating that market breadth, hence market sentiment, is extremely negative. Before I am willing to suggest we have seen a bottom, we need to see a price retest of the recent lows which is not accompanied by the same extremes of negative breadth. Typically this will not happen for another two or three months and any intermediate term rally which may occur here is doomed to fail.