Brandon

Daily Market Outlook: Early Indications Are for a Modest Rebound

It appears policymakers including the fed are inclined to watch and wait. They will step in when they feel that absolutely have to but otherwise they'll remain on the sidelines.

In my opinion this almost guarantees a further 20% drop in the S&P from the old lows. The rate of bad news will begin to slow, but with a lack of good news to drive the market, it will slow it's decent before rebounding in a huge way.

That's the tough part, you shouldn't try and pick a bottom but waiting for a pop is going to cost you huge when the pop has all of this current liquidity behind it. It's tough out there.

Predicting the Financial Sector Rebound

There's one major problem with your thinking. No one seems to know what will happen next including the companies themselves. Even Citibank doesn't know exactly what some of its assets are worth. How can anyone be a buyer of this stock with that in mind?

Normally when a company gets destroyed like this, value investors can figure out the book value of a company and assign a fair value, in their eyes, to a stock. How can you do this with Citibank?

The bottom line? Citibank could be wildly undervalued or wildly overvalued. That's an awful amount of risk long or short.