Five Reasons the Markets Don't Like the Bank Bailout
Money to Stay Put, But Hope Remains
4. Money Will Stay on the Sidelines
With the government unable to stem the tide of uncertainty bedeviling stocks, convincing people to buy will prove all the more difficult.
"The poor reception afforded to Mr. Geithner's speech in which little was revealed reminded investors that more turbulent times may be ahead without some sense of resolution to the health of the banks' balance sheets," Andrew Wilkinson, senior strategist at Interactive Brokers, wrote in a research note to clients.
The result is likely a stock market that will continue to be range-bound, and perhaps even retest its November lows.
"Is there a reason to deploy a lot of capital in this market? My view is we still don't know when we can get some stability in this economy, and until we do it's awfully tough to put a lot of money to work," Twibell says. "To actually go in from an investment standpoint at this juncture is tough."
Video: Geithner interview on CNBC
"You must have a functioning, normal financial system, including the securitization market," Krosby adds. "In the market economy, the financial infrastructure is the lifeline."
5. One Hope: 'Buying Begets Buying'
The one bit of solace from the post-Geithner selloff Tuesday was that you could have set your watch by it.
As news spread last week that a rescue plan was in the making, the markets jumped. When the actual plan was unveiled, the market jumped back. Buy-the-rumor and sell-the-news has been one of the few constants in a stunningly volatile market, and the continuing of the trend raised hopes that the selloff Tuesday would be a one-off event.
"This is a trader's selloff, 100 percent pure and simple," Cohn says. "When (the Dow) gets back to 7,900, 7,850, buyers come back. It's nothing."
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So when selling begets selling, the one hope is that the corollary can be true and will be one catalyst helping the market get past its banks-induced doldrums. That trend is likelier to come once Wall Street has a better picture of what the White House is going to do to help.
"Buying begets buying, and that's a takeaway that has served me in good stead," Krosby says. "What gives you, the retail investors, hope is when you start to see the hedge funds go back into equities, institutional buying into equities, that pushes the market up for two or three days."
A change in the news cycle away from the negativity of the White House's fumbling of the bank rescue announcement would help make that happen.
"Professional investors would much rather see an organic move in the market, meaning it's not induced by any move from Washington but rather by a company saying revenue looks better than expected, that orders have picked up," Krosby says. "Or they begin to see the news, the macroeconomic data are stabilizing, that's what moves the market ultimately."
"Slowly but surely this thing is going to get better," Cohn adds. "It's just really slow. Until the bad news stops, you're not going to change the world's perception."