Oversold & Headline Driven

Good morning. Premarket futures are pointing to a positive day as investors try to play for an oversold reflex rally.

The latest speculation is that Congress will have another vote later this week and that the final deal would include only a few cosmetic changes from what was presented yesterday (at least that's the hope). In addition, chatter is building for an emergency rate cut among many other unusual measures as Congress tries to reach a consensus. Overnight LIBOR, which is the rate banks charge to each other, jumped overnight showing that the credit markets remain frozen.

Premarket gainers: HUN, SOV, NCC, SIL, CNO, SFI, TMA, RF, FHN, AIG, WB, SID, GNW, STR, SSL, FNM, SOL, ABK, RBS, ETFC, GFI, UNH, ASML, FITB, CELG, TRIN, JRCC, RIMM, & TS.

Premarket losers: WEN, CY, ID, OHI, QTWW, DRC, BCON, PEIX, PMI, VSE, BLDP, IFLO, MTL, IOC, & BCS.

Along with the latest speculation over government intervention and new rescues, at 9:AM we have the S&P/CaseShiller Home Price Index, at 9:45 the regional manufacturing survey Chicago PMI, and at 10:AM a report on consumer confidence. President Bush is also scheduled to make statement on financial rescue plan before the market opens at 8:45AM.

Much like we've seen over the past week, this market will remain headline driven but we're oversold enough right now that additional downside pressure will be difficult to muster without something extremely negative and unexpected to hit the wires. That could certainly occur in this environment, but traders with short-term time frames should expect some positive action to develop at these levels following yesterday's meltdown. Beyond that, what we really need to see if a bottom is at hand is the market to stop going down even in spite of additional bad news. When you see that happen, then you know we've reached levels that can sustain the gains for longer than an oversold reversal.

Have a terrific Tuesday!