Thursday has been a day of indecision for the markets. The DOW in particular has seesawed between positive and negative territory the entire session. The good news is that the action towards the end of the session has prices moving into positive territory. We may have hit or be near a short-term bottom. Odds of a small bounce from here are favorable at this point. We still believe there is more downside action ahead, however.
Much of the afternoon action in the DOW has been attributed to a drop in oil prices on the news that China is cutting its fuel subsidy by 17%. In the long term, this news is inconsequential. Oil prices had been down by as much as $4/bbl, but have recovered slightly over the past hour or so.
In related news, two former Bear Stearns fund managers were taken into custody on a nine-count indictment related to the collapse of two Bear Stearns Hedge Funds last year. The collapse of the two funds is now widely regarded as the event that kicked off the ongoing credit crisis.