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Geitner's Plan (or Plan to Plan)

So, today was a blood bath.

The market had heard all the hype about Geitner's speach and was ready for a grand slan. Remember the President's statement yesterday: "Tim will be terrific","I don't want to steal his thunder"? when asked about the bank plan.

Unfortunately, the market was not impressed – they expected a tsunami of a plan and got a spring shower instead – selling off over 400 points. It was not a plan, but rather a plan to develop a plan.

Some of the points in the plan to plan for a plan are good. In fact, Cramer is out there hyping it, saying that his inside sources are stating that Geitner gets it and really has a plan, but he just couldn't communicate it. If that is truly the case, then the market selloff is overdone and we have a buying opportunity.

I posted the minute by minute chart of the S&P 500 above. You can see that the market moved higher when Geitner started talking. It paused as it began to digest his words, and when it realized there was not a plan (but rather some strong talking points that might some point in the future lead to a plan) it sold, and it sold off hard. This, I believe is important, because tomorrow we will likely open down (just a guess – I'll bet Asia and Europe will be down when I wake up tomorrow), but I think the market will start to realize the the good points are the basis for actually fixing the bank problem.

Here are the good points of Geitner's speach:

1. stress tests – to determine if a bank will get fixed with the gov't money – stops flushing good money after bad

2. lots of money to shore up capital of the banks that pass the stress tests

3. privae sector funding / purchasing of bad assets

Unfortunately, everything in the speech was vague and no details were released. The country expects Obama style communication from every aspect of his government. Today, Wall Street was disappointed with what it heard. Tomorrow, it may reflect on it and be hopeful again.

Mark