Selling in the last hour came back with a vengeance today. Tell me, what does it mean when the Dow is up about 80 points at 3 PM ET, then drops 180 points in 10 minutes, then rallies back to end up about 40?
It means traders are confused. Confused by the Fed and why they did not make the credit access plan announcement yesterday, confused by the headwinds they are facing with weaker earnings and a weaker economy.
Traditionally, traders should buy with the Fed cutting, but not this time. Liquidity is no silver bullet for housing, mortgage resets, or poor earnings guidance.
While no one argues that adding liquidity is a desireable thing, the markets clearly wanted rate cuts as a way of helping a weaker economy.
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