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Bulls Have Little To Hold On To

Markets started weak, but quickly found a floor and began a modest rally...until 10 AM, when the ISM numbers showed a steep decline and markets moved down again.

This was a very poor report from the ISM, which measures manufacturing activity. The index dropped to 43.5 (below 50 shows contraction) from 49.9 in August, the largest one-month decline in 24 years and the lowest reading since October 2001.

Combine this with the miserable sales report from Ford, and yesterday's housing report from Case Shiller, which showed that home prices continued to decline, and bulls have very little to grab onto this week.

Still, there seems to be more of a buyer's strike than intense selling today--there are no bids around, and volume is light. This is supporting the arguments of some bulls, who are arguing that it is likely that the bulk of forced selling we have seen is over.

If that is true, then any modest pickup in buying activity--like we are seeing midday in banks--will be a big help to the markets.

We are waiting for comments from NYSE CEO Duncan Niederauer, who will speak shortly on the short selling ban that has been imposed on financials by the SEC.

The SEC deadline on the ban on short selling financial stocks expires tomorrow, and there is considerable speculation that the deadline will be extended.

There is also considerable discussion about some type of new "circuit breakers" for stocks, perhaps including individual stock circuit breakers that might, for example, halt trading in an individual stock for, say, 10 minutes if it dropped 10 percent in a certain time period.

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