With the macros the way they are (and I'm not really speaking about government-released numbers), the chances that SP 500 @ 666 is the bottom is highly, highly remote in my mind (though it cannot be wholly dismissed - nothing can).
There should be a bear market run for a while at some point (maybe the point is now). And even though I said it should reach SP 500 @ 850-900 or possibly even 1000, I would advise to at least start to convert to cash if and when we pass SP 500 @ 800, because I can't even guarantee those levels. Of course, if you would have listened to me, you would have converted at the beginning of the year, natch.
Two other things:
1) If you believe anything Citi or BoA tells you, I have a bridge to sell you down the street where I live. Citi and BoA *might* be able to make a profit if we ignored all their Level 3 and off-balance sheet assets (how many hundreds of billions worth of worthless trash?), but I wouldn't bet on it.
In fact, it's another *tell* in my mind that we are nowhere near the bottom when people still believe what these financials CEOs tell them after being burned how many times now. Pump, pump, pump, pump and then dump, folks...
It's only when people completely disregard, or acknowedge them as complete liars, anything these guys tell us that we might actually reach a bottom.
2) Reinstatement of the uptick rule would mean nothing because it hasn't had any impact since stocks went to penny movements instead of fractions. Crashes come when people refuse to buy, not because you have to short at a higher number.
My guess is that mark-to-market will be removed. Two scenarios can happen then - 1) Buy the rumor, sell the news (market jumps up in anticipation and then crashes when passed); 2) We skyrocket when it occurs.
jmfcst disagrees with me here, but I think removal of MTM is useless and actually makes things worse. You see - right now financials are hiding all of their complete garbage in Level 3 or off-book. It allows them to look much better than they are, so in a sense, MTM is already not being followed (since the off-book stuff is not being priced properly). We know the Level 3/offbook stuff exists and just how bad it is - that's the reason why Citigroup has fallen from $50 to $1.50 - investors are not that stupid.
If you remove MTM, you will entice these financials to price everything to model, thus creating a greater amount of game-playing (a la Enron, which is why we have MTM in the first place), which, after early pumping, will in the end lead to a final ugly, ugly dump (when we figure out we can't trust anything being done). kaboom...
