Breaking news from the bubbleheads at CNBC - the DJIA closed flat on the week after big selloffs. Well check the RUT/IWM -its down about 2% on the year while the DJIA/SPX are both down in excess of 14%- but just keep buying those big caps- that is the place to invest.
Anyhow, the big winners today were brokers, emerging markets, banks and oils- oh and crude was up about $7 but no word of that either from taut TV. Lagging sectors included drugs, retail, defense, semis, trannies and real estate.- Also note the action in WINTEL- both lower on the day.
VIX - lower by 4.5% at 31.6;
Up volume about 8X the down;
NYSE/NAZ - about 4,000 more winners than losers;
SKF is trading again and if you want to short financials its a pretty pretty good way- closing near $100 after hitting about $156 yesterday- good volatility;
One untold story- the UYG- ultra long financials- opened over $24 and closed near $22 and oil - so it will be very interesting to see the Monday trade - I suspect the selling may begin early.
One last bit on the bailout comes from Barry at the bigpicture.com- as he lists the bailouts/special facilities:
Bear Stearns -
Economic Stimulus progam-
Housing Bailout Program-
Fannie & Freddie-
No Short selling rules-
Fed liquidity programs (Term Lending facility, Term Auction facility) -
Money Market fund insurance program-
New RTC type program
He goes on to say:
"If you are a fan of irony, consider this: The conservative movement has utterly hated FDR, and his New Deal programs like Medicaid, Social Security, FDIC, Fannie Mae (1938), and the SEC for nearly 80 years. And for the past 8 years, a conservative was in the White House, with a very conservative agenda. For something like 16 of the past 18 years, the conservative dominated GOP has controlled Congress. Those are the facts.
We now see that the grand experiment of deregulation has ended, and ended badly. The deregulation movement is now an historical footnote, just another interest group, and once in power they turned into socialists. Indeed, judging by the actions of the conservatives in power, and not the empty rhetoric that comes out of think tanks, the conservative movement has effectively turned the United States into a massive Socialist state, an appendage of Communist Russia, China and Venezuala.
To paraphrase Floyd Norris , we have become Marxists, but of the Groucho, not Karl, variety . . ."
A few more comments on the bailout and the financials- first Cramer saying on his site that one should be buying tech and selling financials- well not sure about the financials - but the tech- well who exactly is a big buyer of tech - yes the big banks and investment bankers and what is going to happen to their IT budgets and expenditures- I suspect a very tight leash- and not sure that is in the current tech EPS numbers.
Alan Farley of realmoney.com with his take on the bailout- similar to mine:
"I think the gov't did what they needed to do.
The world markets were 2-3 days from crashing and starting a run on the banks and brokers. If our brokers seized up, which was a real good bet, we'd lose access to our trading capital and couldn't sell short anyway.
Instead we'd be waiting in long line for SIPC to dole out our insurance payments.
Bank runs create depressions and world wars. A bit of well timed market manipulation is a much better alternative. "
Markets opened at the highs and have been coming down since as index futures were trading limit up before the open.
Strong sectors- financials, brokers, banks, homies and gaming while real estate, reits, drugs, metals and semis lag.
NYSE- 2400 GREEN;
NAZ- 1700 GREEN;
NDX- 75 GREEN;
OEX- 85 GREEN;
VIX- down 12% at/near 29.25;
Up volume 5X down with over 1B already;
Not a buyer at the open but maybe before long depending on the dip (which continues) as the DJIA has lost about 100 since I started typing.
John McCain with a wonderful headline this morning- "Fed Should Get out of Bailout Business"- well John did you want to see a depression? and you don't like 800 point rallies on the DJIA?
Bottom line- it had to be done as the economy could not stand a continuation of the status quo- we can't have all the money center banks become insolvent- so its probably a good thing in the long term even though its seems pretty pretty socialistic in the short term.
One other thing- don't sell stocks when the VIX makes a six year high;
Markets closed way up on the heels of rumors that the government will be taking all the bad assets currently on the books of various financial institutions onto the books of the taxpayer - in a "RTC type" entity.
Not much more to be said except that all the capitalists are thrilled socialism still exists when its needed.
NYSE -1600 net winners;
NAZ- 1375 net winners;
VIX- 33.1 after hitting well over 40;
Anyhow, we are back over 1200 on the SPX after hitting a low of about 1133 earlier in the day.
Follow through has not been a major quality of these markets of late and every one will be looking for that tomorrow.
Markets are trading higher but predicting how long they will hold or where they go from here is just a bit difficult.
Strong sectors include china, emerging markets, metals, insurance and real estate while biotech, trannies, retail and homies lag.
NYSE- 1000 net winners;
NAZ- 1160 net winners;
VIX- down 4% at near 34.75;
Up volume 5X down volume;
A few technical issues this morning so not trading but still not sure what I would do - anyhow here are some great links:
The NYC Mayor on the next crisis;
An interesting poll from Quinnipiac;
The latest from Roubini;
Rasmussen on the new map;
WHAT A CLOSE
Markets were weak all day and closed at the lows despite what looked like a rally attempt in the late afternoon.
DJIA -460, NAZ -103 and SPX -57 and breaking all major support.
MS GS crushed along with the banking index- bright area - metals surged with gold closing near $870.
Every DJIA stock in the red with the biggest losers being AIG JPM C and AXP.
VIX- higher by 19% and closing at/near the high for the year at 36+;
Pretty much in uncharted territory technically as we closed below the key 50% retracement-
I still haven't bought although was tempted to buy that afternoon lift but thought better of it - did sell my SKF - and would like to get in a long UYG trade- so waiting.
Markets open lower and the first bounce has already been sold as we are back near the morning lows. Too many folks may be expecting the recent results of opening at the bottom and then a climb through the day- don't think that works today.
Strong sectors- metals, semis and oils while financials, brokers, gaming, internets and retail lags.
NYSE- 1900 net losers;
NAZ- 1265 net losers;
NDX- 18 GREEN;
OEX- 15 GREEN;
VIX- higher by 6% at/near 32.25;
Down volume 5X the up;
Don't plan on doing much today as the markets move a hair faster than I like-
AIG- looking like people finally coming to their senses and it looks like its heading back to a 1 handle.
Also saw that Cramer was buying MS for his AA portfolio - not sure I want that risk now- it could be a home run or it could head to single digits.
BACK OF THE ENVELOPE
Quick on AIG- government to lend up to $85B for up to 24 months at Libor +8.5 bps- hmmm- and get 80% ownership-
Now that equates to about 13B total outstanding shares today v 2.7B shares yesterday and -with another $10B in interest expense or almost $4 per share before the dilution - well why would I pay more than a few pennies for AIG common- vs. the $2.5 currently on my screens- 8:12 EST.
Markets closed higher led by the small and midcaps with the strongest sectors being the banks, real estate, oils, homies and insurance while utils, telecom and drugs lagged.
Despite the big run up in the indexes the NYSE/NAZ internals were flat;
VIX- closed down 3.7% at near 31.5;
SPX closed at 1213.5 and a buy at my price of 1170 would have been sweet but didn't happen as it was the low. Any retest of any where near that level will be bought- and if AIG doesn't get bailed within 24 hours that low may be tested quickly.
Markets continue to trade above the flat line but buyer beware as lots of this rally hinges on a rescue of AIG- and if it doens't happen?
NYSE market internals - very weak with 1165 net losers compared to only 200 net losers on the NAZ;
NDX/OEX- both with over half their shares in the green;
Banks, reits, financials, homies, shipping and internets higher while utils, steel, telecom, metals and techs lower;
VIX- back at the flatline- 31.5;
Crude getting close an 8 handle;
10 year note 3.39%- wacky;
WINNERS- UAUA FLWT SBUX SNDK EBAY MER WFC BAC HPQ JPM WB;
LOSERS- MS DELL ETR AES CI S AEP GS SIRI VMED MNST TLAB FMCN JAVA MSFT;
Up and down volume about equal with a TRIN of .51- so the volume is going to the winners;
All about the financials again- and AIG the dilemma again- no clue how it plays out today but I don't think the lows have been made as those LEH assets will be sold and more mark downs will likely happen leading to lower prices and probably more "issues."
Off the lows as the SPX shockingly hit its low at 1169.49- about 50 cents off the 1170 I was expecting as the 50% retracement from the 770 low in October 2002 to the October 10 2007 high of 1575.
Strong sectors - banks, reits, shipping, bio and internets while metals, oils, steel, emerging markets and gaming lag.
NYSE- 1875 net losers;
NAZ- 830 net losers;
VIX- up another 5% at near 33.25- and showing lots of relative fear;
Not very excited about the markets here as I expect another move lower - so still keeping my powder dry as we saw the same thing yesterday-
Markets not set to bounce this morning as AIG looks to be done - and GS trading down another $10 despite the street beat-
The good news- well here comes the SPX 50% retracement- so that will be interesting- and some great links:
Whitney on the grim future in the financials;
Dr. Brett and his thought process;
Trader Mike and his charts;
The Quant with the latest study;
Adam on the VIX and pundits;
Markets down big in the last hour as we get the 500 point drop in the DJIA and a break of 1200 on the SPX- hopefully no one bought the morning nonsense - and the typical bullish rally after the down open.
5,000 net losers on the NYSE/NAZ';
NDX/OEX 20 GREEN;
VIX - higher by 23.6% at/near 31.7 with the SMA 10 about 30% below the current quote;
Volume pretty heavy at 1.8B shares with more than 20/1 to the downside;
Gold heading back to the $800 level and if the FED cuts tomorrow it could quickly be in the rear view mirror;
RSI (2)- levels on most indexes at/near 10;
OK- still looking for 1170 on the SPX as the 50% retrace probably gets a nice bounce in the market if it hits- probably not tomorrow but not expecting the markets to rally big from here either-
Hopefully most didn't buy into the great TRIN reading Haines saw early this morning- or the "only down 90" cramer saw when he yapped about the bottom this morning.
Note the DJIA down 330 and the TRIN now at .80- It is pretty meaningless today IMVHO- more meaningful - the action of the internals with 4400 net losers between the NYSE/NAZ.
Margin clerks probably accelerating the down turn at this hour so we probably see a bounce before the close.
Markets have opened lower on the heels of the LEH bankruptcy and MER buy out by BAC. As I type, the DJIA -280, SPX -27 and NAZ-35.
Sector strength found at utils, homies, defense and trannies while steel, emerging markets, oils, ags and shipping are the worst.
NYSE- 2325 net losers;
NAZ- 1500 net losers;
OEX- 10 GREEN;
VIX- higher by 12% at/ near 29;
Down volume about 8X the down;
Not real excited to buy stocks yet as I suspect the day will have lots of starts and stops and trying to game it will be difficult at the least.
Cramer was initially excited that the DJIA was only down 90 not realizing that most DJIA stocks had not opened and the futures were down over 300- the complete guru;
The TRIN at .6 was also excited the bubble folks but now it is back near the 1.00 level- so don't get too excited yet-