The best line I've heard so far regarding the bail out of Fannie Mae and Freddie Mac.

The market's reaction to today's news is critically important, I think.  The talking heads were generally gushing over the bailout this morning.  If we don't finish strong today, or if the market doesn't respond favourably tomorrow and Wednesday, this is likely a strong sign we're heading lower.

Frankly, the intra-day action has been nothing short of disappointing.  The Dow was up 340 points on the open, and as I write this, we've given back 230 points already.

The pin action seems to indicate that investors are using the spike to continue liquidating.  Natural gas is up but the stocks are down.  The Toronto Stock Exchange - a proxy for the global infrastructure trade - is down after being up hard.  The euro is negative when, it would seem to me, it should be positive on this news given that the bailout transfers liabilities directly to the US government. 

I think that the hedge fund unwinding of the global commodity/infrastructure trade is continuing, despite the news.  If so, it portends badly for the market as much of the unwinding is coming from redemptions by clients. 

I'm watching closely and trying to keep an open mind, but the action so far further reinforces my belief that this market is in trouble.  The next few days may dissuade me of my opinion, but it better start doing so fast.