What an interesting trading day. Four observations:

1) Markets rallied midday on comments from Mr. Trichet in Europe-he said they would "take appropriate decisions at any time." Traders interpret this to mean that Mr. Trichet is now clearly in the rate cut camp, and to providing "unlimited" liquidity. This is a big turnaround: Trichet turns dovish.

2) Stock traders are fixed on the bond market, as traders want to believe that today's huge selloff in bonds means that the flight to quality trade is ending.

This would be a big psychological boost, because stock traders want to believe this is a sign the credit markets might be in the process of unfreezing.

3) We are so oversold, and there has been so much money lost, that a small but significant minority of professional traders are now LONG the market--they are standing in the bleachers cheering like crazy, because for them it is ALL IN time.

There is a larger group--half of all traders--sitting on the sidelines waiting for some sign of a tradeable bottom. They do not have it yet, but that minority that is long is trying desperately to get the uncommitted group in.

• Retail Numbers--A Closer Look
• Traders: Rate Cut Should Have Been Later In Day

4) The most important development is the coordinated global action. First U.S. federal agencies began coordinating activities, then other countries began active intervention, now there is GLOBAL COORDINATION. Consider that we have had, in less than a week:

--a UK bailout,

--Fed buying commercial paper,

--a Spanish TARP,

--coordinated rate cuts,

--deposit guarantees in Europe,

--a banking sector support plan in Russia.

Merrill Lynch's economist, Alex Patelis, summed it up best: "Unless we are assuming that global policy makers are incompetent, they will sooner or later get it right."

• Investors Get a Rate Cut, But Wonder What's Next
• Apple As Wall Street Whipping Boy

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