In just hours after the announcement, the major indices backed away from the key 20- and 50-day moving average lines and plunged to the bottom of the current trading range. For the S&P 500, the support is at 800 to 820 -- and the index closed just seven points above the top line while the Dow actually penetrated its support line.
It is hoped that Geithner's professorial lecture resulted from inexperience in explaining real issues to the public following an increase of presidential expectations. If that's the situation, then we should see more details and see them quickly.
With that in mind, we were buyers on yesterday's decline with the expectation that further leaks and explanations will be forthcoming that will fill in the blanks and tend to stabilize the market.
In fact, as I was writing out some of my thoughts last night, Sen. Chris Dodd said that "mark-to-the-market," which most analysts had hoped to see and did not, is part of the new plan and that and other details would be elaborated on today -- we will see.
This type of emotional selling based upon disappointment about a government official's lack of specificity is rattling to investors but it's not unusual. And if the market recovers, it could actually tend to reinforce support zones and provide for a more stable platform as the weak holders are purged from the market.
To a technician, the most important issue is that the support zones of the market have held. (One worth watching is the S&P 500 (SPX), my trade of the day.) But if the administration fails to come up with some solid details today, the markets could plunge through support and start a new leg down to more lows.
Sam Collins is a contributor to OptionsZone.com.