Congress appears likely to pass some kind of bailout legislation after Monday's stock market plunge. There have been loads of criticism for the way our representatives have reacted to the crisis. At the same time, none of the choices they face are particularly appealing. Vote for the bailout as is, and risk alienating their constituents, or, push for a better bill that focuses more attention on "main street", and risk a full blown economic crash due to the delay. Personally, I think it has been encouraging to see our democracy function, and to know that people's voices are at least being heard. At the same time, I still think we will end up with a bill that rewards those who created the problem and shortchanges the taxpayer.

So expect a bill to pass the House sometime toward the end of this week, with the Senate following soon after. Which brings us to the market action of the past two days. The press is inaccurately reporting that the market selloff occurred on news that the bailout failed. Indeed, some of the drop did occur after the vote was complete. However, looking at the 10 day SPY chart, we can see that the market was in a downtrend from September 19 until today. Much of Monday's drop occurred before the vote, and we have since regained nearly all of the ground lost since closure of voting on the bailout bill. Furthermore, today's rally was on significantly lower volume than yesterday's drop on all index charts.



I basically sat today out, and am expecting a bit more strength before we resume our downtrend. At the same time, I will be gradually moving from a high cash position into some short positions tomorrow, and will be looking for more short setups should the market continue higher on low volume. There are already a number of charts showing a bounce into resistance.

- PWR was up over 14% today on slightly decreasing volume. The price is also sitting just below the 200 day moving average. I started a short position today.



- TAM: Airlines are in trouble across the board.