Was the Tuesday miracle rally the actions of the PPT?
I've been getting asked if the Plunge Protection Team was the driving force behind the crazy rally on Tuesday.
Honestly, I don't think so. Tuesday's rally and today's lack of follow through are the first signs to me that we may be truly entering a bear market. That is the sort of one-day-wonder short covering spectacular rally you see in bear markets. You only need to look back to what happened after the Nasdaq cracked in March of 2000 to see many instances of this.
Does this mean I think we fall down 20%+ in the near future? I'm not sure. The timing on this thing is tricky since the housing market moves slowly and the banks even slower. The more negative news that keeps trickling out, the more pressure they'll be on stocks.
The "animal spirits" want their traditional year-end rally, and they'll keep looking for it at every turn. I'm more inclined to think we stay pretty flat from here through the end of the year with the real fireworks to come next year.
