Looks like the market finally succumbed by the end of the day. I was able to do pretty well with a large short position in BIDU, which I closed out at the end of the day. The nasdaq was underperforming the entire day.
Tomorrow morning we have the CPI report. If the numbers come in nicely, the market might find some support as it will continue to "allow" for more rate cuts by the Fed. However, even if the inflation numbers come in poorly, I don't expect a huge market reaction, as the Fed is currently more focused on the economy rather than inflation.
Overall, still can't find a good reason to buy anything here. Possible positive catalysts/support I can imagine are:
1. Announcement of major investment in the US financial system by sovereign wealth funds overseas.
2. Large short positions in general providing support during squeezes
3. A large merger deal from last year actually going through
4. Improvement in the housing market - large number of actual completed refinancings
Reasons for fear?
1. INSOLVENCY of any nature, and resulting direct government bailout announcements
2. Further write downs
3. continued economic deterioration as evidenced by data
Bonds have really sold off lately - but the question remains whether or not this is merely a temporary reprieve in sentiment, as we prepare for further downside in the equities markets.
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