A GROWL or purrr

The market activity over the last six weeks has inflicted a considerable amount of discomfort to the bears.   With claws trimmed they reemerged yesterday and with an overextended rally and over bought conditions on most technical indicators, they roared and successfully pushed the markets down roughly 3%.    But is the bear back in charge?   

Obviously too early to tell.    We know the market was overextended.   We know the recession continues(although evidence of a deceleration in the rate of contraction is accumulating).   Entering into yesterdays trade the sellers and profit takers were looking for the catalyst to embolden their case.  They received it in the form of mixed financial earnings, also a blog stating the Treasury would convert their preferred shares to common, significantly diluting existing shareholders.  Further we heard should Citi require more capital, sayonara Vikram Pandit and board.    Did we think the market would react positively to news the Government, in essence would demand a seat on the corporate board?  Thus far, the track record of our fearless leaders on the hill has not instilled a tremendous amount of confidence.    

The bears had their day.  We'll continue to monitor the markets to see if this is anything more than a natural round of profit taking or something more significant.   I tend to believe it a natural round of profit taking, with perhaps a bit further to go.  However, I will be respectful of the market gauges and technicals levels for any longer term damage to this up move.  

I enter today with minor scratches and a defensive posture, respectful of my well trimmed stalker.