Devils Advocate (with myself)

As usual I've spent my spare time over the weekend reading too much, hypothesizing too much and overthinking. What have I come up with? As usual, arguments for both sides as to where the market is headed from here in the next couple of weeks.

Position A: The markets are weak. Banking index close to November lows, Dow dipped below 8000, bad news coming from Bank of America and Citigroup, earnings season is beginning and not looking good, request for rest of the TARP money, other countries going down the tubes like England and Ireland. Result: markets down.

Position B: Obama and his team come out with guns blazing right out of the gate. We've already heard about the 825 billion dollar stimulus package being put together, the rumors of changing the mark to market rule, finding ways to restructure home loans, setting up the "bad bank" to take the bad assets from banks, and a whole host of other straw grasping ideas. Results: markets up

The markets are emotional, they make moves based on emotion. If Position B does happen, there will be euphoria... for a little while anyway.

This is just short term thinking. The long term is still down. Magic tricks are fun to watch and you enjoy them for a little while after the show is over, but pretty soon the excitement wears off and you're back to your reality life.

If Position A is the near term path, the target on the Dow is 6500 before the big bear rally that'll take us to 10,000-11,000.

If Position B is the near term path, we may by pass the dip down or it'll simply be delayed.