What's next?

In the previous post I wondered if the powers to be have any other tools left in their tool kit to prevent this financial meltdown. It seems they found one in their back pocket. Many countries around the world are taking measures to recapitalize banks, guarantee deposits, back the interbank lending and even buying stock in banks. So much for the Kudlow creed that free market capitalism is the best path to prosperity. Even Kudlow has deserted his creed. He said in his closing remarks on Friday that if the government delivers (buying stocks in banks), it could be a big day for stocks. He is more concerned about the market going up than free market capitalism now!

The government has delivered. Now it remains to be seen how the stocks react. I have no confusion that 2002 lows beckon the market. It's like some one going to Paris as a tourist and not visiting Eiffel Tower. The market has come so far down that I can't imagine it not visiting the 2002 lows at the very least. Ideally I would like to see it happen in the early part of next week then I would be more comfortable going long because I expect a big up move before the week is over. We will see if the use of the latest tool buys some time for the market or not.