Well, did the market really reaffirm Friday's floor on the stock market?

Although the market did respond enthusiastically to the Citi bailout, the announcement of P-E Barack Obama's economic team, and chatter about additional fiscal stimulus, it seemed a bit muted to me. That may be a good sign, since a stronger rally would have suggested more of a short squeeze and irrational eupohoria. The good news is that the response did not peter out or reverse, suggesting that market participants really are in a mood to give Team Obama a chance.

It would not be surprising to see a moderate degree of profit-taking over the next few days. Unfortunately, this is a very shortened trading week, with no trading on Thurdsay, a half-day of trading on Friday, and probably limited trading on Wednesday as well due to holiday travel, so it will be virtually impossible to judge the full market reaction to Barack's economic team this week. Still, it would be a good sign if the stock market were to end the week with a strong gain and a bad sign if the market ends with a loss or only a modest gain.

Also, regardless of the reaction to today's news, all eyes will be looking ahead to Monday and preliminary reports on holiday retail sales on Friday and the weekend. The big difficulty is that everybody "knows" that the results will be relatively poor, but the question is the extent to which people are able and willing to look past the state that the economy will be in for the next two months, out to the stimulated economy that we will be in after the innauguration.

In short, for now the bottom remains securely in place.

One key test will be on Wednesday, when we see how unemployment insurance initial claims are trending. People "know" that the report will be "bad", but we need to see if they are willing to look past it.

-- Jack Krupansky