All of our stock market indicators are still negative and we hope you lightened up on your portfolios at the start of the month. On the 2nd we wrote, As we head into September, The Correct Call is concerned with the short-to-medium term outlook for stock prices. The ninth month has wreaked havoc on investors as it has been the worst performing month of all. Adding to our concern is our market cycle indicator; it is pointing to the indexes moving downward and possibly hitting a bottom in mid-to-late September.

As we head into October, we hope the market will continue on its classic course and find a bottom during the Halloween month. A lot is going to depend on how investors’ view the bailout. With the first vote on the $700 billion package today, we could start the week with a wild ride.

We have read some prognosticators feel the Dow could fall 3,000 to 4,000 points if the bailout is doesn’t go through. We don’t see that happening. We believe 9100-9600 is the worst case scenario. We do have some clues on how the market might react to nothing passing. On Friday when it looked like the entire package might get flushed down the toilet, the market didn’t crash; it held in there.

We are not fans of all the fear being generated out of Washington. Pass this bill or you are going to be in soup lines. It’s odd to The Correct Call that the people who presided over this mess to begin with are the ones shouting from the rooftops telling us how to fix it. All politicians at the table, not one CEO of a major financial institution that steered its way clear of this mess. If the bailout does pass and doesn’t work, then what’s next?