How bearish is sentiment on the Street? Very.
We are getting an early Treasury Bill Rally, as anticipated. That's not the issue. It's what happens on Monday that traders care about. And most are arguing to continue to sell into the rally.
Huh? It's a testament to the rhetorical strength of the bears, who are arguing that the next battleground will be the global economic slowdown that we are all sick of hearing about.
Their argument: just like the U.S. financial crisis is deeper and lasting longer than bulls anticipated, the global economic slowdown will last longer and cause more adjustments than anyone anticipated.
What about housing, the origin of many of these evils? Bears were handed a gift this morning in the form of the worst New Home Sales since 1991. Not only that--inventory levels are remaining near 11 month highs.
They argue for continuing weakness in big global commodity stocks (already 30 percent off their highs) as well as global industrials.
Oh, and did I mention that the Street is worried about its own future? The feeling is that trading volumes will be contracting significantly in the coming months, due to 1) continuing deleveraging, 2) restrictions on short selling.
And the sour taste in the mouths of your average Joe regarding Wall Street will also mean less interest in investing, which will hurt investments in mutual funds and Exchange Traded Funds (ETFs). ETF volume is an important part of trading volume.
Bottom line: a leaner, but not meaner, Wall Street trading community. Many of my contacts are looking for jobs, or fearful they may not have one by the end of the year.
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