Fed Pres Donald Kohn moved futures 5 points up at 8 am ET by saying that if tighter credit conditions made credit more expensive and discouraged spending, it "would require offsetting policy action." This seems to imply more rate cuts, whether of the fed funds type or the discount rate. He said that the 'uncertainties' in the credit mkts and economy must lead to a 'flexible and pragmatic' approach in making policy.
We are likely to get a rally at the open on this news. Remember, the Street is extremely bearish and for the most part short the market, so the potential for a sharp short-covering rally is very strong. Whether that amounts to a real bottom is very unclear.