If you have any doubt what the big story for tomorrow will be look no further than the current humongous headline on MarketWatch which screams “Biggest Bailout Ever”. That should make for an interesting session tomorrow. Too bad I’m going to have to miss it due to other commitments. Barry has a ton of Freddie & Fannie links & commentary in case you haven’t already had your fill of this story.

Back on the technical side of things, the market had an impressive bounce off the lows on Friday to close near unchanged. The Nasdaq and S&P 500 both bottomed at their July closing lows. The Russell is still perched over 9% above its July closing low and is still above its 50 and 200-day moving averages. So the small caps continue to hold up well but it’s hard for me to believe that they won’t eventually get dragged down. The small caps and other pockets of strength are keeping my favorite bottom indicator, T2108, from reaching that magic sub-20 area.

But all this technical talk is probably for naught right now. This Freddie & Fannie bailout is a wild card. More specifically, the market’s reaction to the bailout is the wild card. We’ll just have to wait & see how the market responds.

Trend Table

No changes

Trend Nasdaq S&P 500 Russell 2000
Long-Term Down Down Lat
Intermediate Down Down Up
Short-term Down Down Down

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.