A Catalyst? LOL

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Today reminds me a lot of November 21st, 2008. Back then, we had seen an unrelenting, multi-week selloff after a brief recovery from the October crash. It was a Friday, and I remember seeing the S&P 500 hit 741 intraday. At that point, CNBC broke news that Tim Geithner would be named Secretary of the Treasury. The market subsequently turned on dime to finish the day a whopping 60 S&P handles higher at 800.

The financial media ran with the story, and claimed that Geithner was “the catalyst” for the market’s stunning reversal. In fact, I could not disagree more. The Geithner news was nothing more than an EXCUSE to rally. The market had become so oversold and was full of so much hopelessness at that point that traders were looking for any reason, whatsoever, to rally. As evidence that Geithner was merely an excuse, witness several months later, when Geithner tried to make a few speeches to calm the markets in early 2009, only to see more unrelenting selling leading up to the March bottom.

Today, various economic data is being fingered as the reason why we are rallying. Again, the lagging/imprecise/manipulated data is merely an excuse to rally a deeply oversold market that had become filled with breathtakingly negative sentiment. Moreover, the bottom end of our trading range proved to be too much of a sturdy brick wall for bears to plow us through that key 1040 level. Just as with November of 2008, perhaps 1040 is not a major, long term bottom.

After today, however, it marked some type of a bottom nonetheless.