Both the bulls and the bears can claim to be happy so far today. We have had a rally, and no less than TWO attempts to sell into it. Stocks are holding modest gains so far.
Bulls remain hopeful that:
--one more systemic risk has been reduced
--markets can focus more on earnings
--dollar rally continues
Bears say that if Fannie/Freddie was the only variable going, it would be 100 percent positive, unfortunately for the bulls, its not that simple.
Bears say that this event:
-- does not change the economy/ biz cycle
--does not eliminate the need for home prices and inventories to come down
--is unlikely to be a bottom (bulls said that about Bear Stearns!)
The bears note the following about trading patterns today:
1) regional banks, while up, are not up much: many have significant exposure to Fannie/Freddie preferred stock, and may have additional losses;
2) Lehmanis again under significant pressure (down 13 percent) as they try to raise additional capital;
3) commodity stocks are for the most part again down today;
4) big momentum tech stocks like Google, Rimm, Appleand Oracle are all down today.
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