Tomorrow the federal regulators will be announcing the changes to an accounting rule called “mark to market.” In a nutshell, this accounting rule is one of the main reasons that banks have accumulated massive losses so fast. The regulators want to take some pressure off of the banks by changing how banks have to go about reporting losses. In the short-term, it would provide some relief. However, like everything else, it does not solve the long-term problem. It simply pushes it out into the future. Depending on what is said, the market might really like these changes.
Don’t forget the unemployment problem. We always get a preview of what the unemployment numbers will be through the ADP report. This is another look at unemployment and gives us a good idea of what Friday’s job numbers will look like.
ADP reported a horrific job loss of 742,000 jobs. This does not bode too well for the job numbers on Friday. My thoughts the entire time have been that this will be the worst one thus far. If it is not, you can thank the Government’s funny accounting system. I wouldn’t put it past them to devise some inaccurate numbers. Anytime they can take advantage of dressing up the numbers to look better, they have done so.
So, the next two days should be interesting. Yesterday was a further continuation of the stock market rally. However, you always need to watch the volume of trading that occurs. If the market goes up and the volume is strong, that is a great sign. The market going up on weak volume shows very little conviction from buyers. That is what we saw today. So now we will wait to see what Thursday brings.
We are still watching the price levels of 800 and 825 on the S&P 500.
Prudent Money Market Outlook 