I mused in my post yesterday whether the U.S. market would respond to the bears in Europe and Asia with a decline of its own today. Well, the market declined all right, for mostly the same reasons:
Stocks slid within striking distance of the November bear-market low on Tuesday, as grim manufacturing data signaled the recession is worsening and warnings on risks facing European banks underscored the continuing toll of the financial crisis.
(BTW, the article's lead paragraph uses one of my pet peeve phrases in published writing: "striking distance." What the heck is that?! No one ever defines what they mean by that. Ten points? A hundred? Writers, please leave Hollywood drama out of financial journalism.)
The fiscal stimulus package became law today and Mr. Market was singularly unimpressed. He's waiting for a more robust plan to clear the balance sheets of the nation's best and brightest banks. Such a plan is still up in the air. Until it's placed into action and market makers know how to respond, stock prices will have nowhere to go but down.
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Nota bene: Anthony J. Alfidi holds short uncovered calls on SPY, IWM, EFA, VWO, and XLF.
