I received this from a friend last night:

Toward the end of my career in the pit I watched a lot of the leveraging

that was going on with these firms.  Sell short term treasuries, buy
 mortgage backed securities, oil, emerging market equities etc. This was
like the coiling of a spring.  In a static market these firms did fine, an
annuity.  With the unwinding/liquidating of this leverage we are seeing
this downward movement in the markets and an opposite upward movement in
treasuries.

BS, Lehman, AIG, hedge funds, Wamu etc.  What is going on seems to be a
massive supply demand problem as they all go down the toilet, liquidating
assets.  As you’ve been championing, is the economy at large all that bad?
Relative to estimates alone if P/E remains at historic levels we could see
a 30% up move.

When is the carnage going to end? Everytime another BS, Lehman, Fannie die
we see very positive sentiment.

Are we just winding the potential for big upside or is everything so
fundamentally impaired that future earnings will continue to be lowered.
I feel the future kinetic move will be up.

The positive sentiment he mentions with each bailout seems to be waning. We got a 15% move in the market that lasted 3 months after Bear Stearns; we got a one day wonder after Fannie/Freddie. The positive sentiment is being washed away and when it reaches its worst, that will be the bottom. A good indicator will be when we get some bad economic news and the market goes up instead of down. That will indicate that the sellers are exhausted. I think we may be close to that point right now, but more realistically, the bottom probably comes in October/November when we’ve seen so many other bottoms.