So Much for the Bailout Rally . . .
Wow, that's a nearly 450 point swing.Very surprising to see the bailout pass, and get signed into law, and then see the market fade.
Once again, I have to say -- I hate to read too much into intra-day action, as its mostly noise, but this is not a positive development . . .
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Friday, October 03, 2008 | 04:00 PM | Permalink
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Comments
This is ominous. Are we going to break 9k on (puke is the new black) monday?
Posted by: crack | Oct 3, 2008 4:04:25 PM
How many people went all cash for this decision?
Oh well.
Posted by: super-anon | Oct 3, 2008 4:05:54 PM
No, it is not. I was hoping we'd get a bounce for a few days so that I can unload some positions. Not looking good. Next week could be a bloodbath.
All aboard the D-Train. (no exclamation point needed,
Posted by: Jeff M. | Oct 3, 2008 4:07:01 PM
Damned short sellers! Oh, wait, nevermind...
Posted by: Scott in Chicago | Oct 3, 2008 4:07:01 PM
BTW during the middle of the day I thought I was the smartest guy in the world for dumping a load of IYT puts yesterday.
Now... not so much.
Posted by: super-anon | Oct 3, 2008 4:07:18 PM
Excellent short covering rally… Oops… May be shorting is not that bad???
Posted by: LB | Oct 3, 2008 4:07:38 PM
Top story on yahoo Finance
Financial stocks, which had traded sharply higher on the promise the bill would be passed, fell after the House vote on PROFIT-TAKING
and as the market focused on the tough road that still lies ahead for the U.S. economy.
(EMPHASIS MINE)
Profit Taking?????
They might as well have added that the indexes were coming off their session highs.
What the hell is up with that?
Have a good weekend....
Posted by: MarkTX | Oct 3, 2008 4:08:17 PM
No kidding. My boss and cronies were ranting that our country was going to fail if this didnt get passed....and now? All quite, nobody is saying anything. I think the non-rally has made a lot of people nervous, myself included.
Posted by: Brad | Oct 3, 2008 4:08:42 PM
So it begs the question...
Was the 300 pt. runup in the Dow before the bailout passed on hopes of the bill getting passed or NOT getting passed?
Hmmm.....
HCF
Posted by: HCF | Oct 3, 2008 4:09:48 PM
That's what I would like to know. That $800B didn't do didley!! I could be wrong; but, I've got a feeling next week is going to be rougher than this week.
Did we really solve anything this week? Apparently not!
Posted by: BG | Oct 3, 2008 4:10:07 PM
BR, positive can be a relative term! HHHhhhhheee! I hate to gloat...instead I think I'll go smoke a good one!
Posted by: JustinTheSkeptic | Oct 3, 2008 4:11:26 PM
Everyone at home says:
"Wait a second! I only grudgingly supported this bill because the stock market got killed Monday after the bill got voted down. This bill was supposed to preserve my 401(k). So after it passes, the stock market goes up. You're telling me it's not?"
Posted by: rj | Oct 3, 2008 4:13:00 PM
Look for Hank Paulson, Ben Bernanke, Chuck Schumer and Chris Dodd to come out of a meeting later tonight saying they need a $900 Billion immediately to help support the market. And if they don't get it by Monday, it's all over.
Posted by: Justin | Oct 3, 2008 4:13:13 PM
That's an understatement Barry.
We're in the midst of Wave Three crash right now folks. Elliot Wave folks have been calling for this action for the past several months. If 1080 ish zone doesn't hold (61.8% retracement of 2002-2007 advance), then get the hell out of the market immediately.
My minimum target is sub 800 on the SP500 if 1080 doesn't hold.
Good luck. SP500 puts feel likes a warm blanket, tho' I converted the big volatility puts into some outright futures short on today's action.
We're in the midst of a deflationary spiral. There really is nowhere to hide.
- AT
Posted by: Andy Tabbo | Oct 3, 2008 4:14:22 PM
Stocks are traded. Traders trade stocks. Traders are irrational, hence the stock market is irrational. What happened was simply...
BUY THE RUMOR, & SELL THE NEWS
Happens all the time in this world!
Credit markets are a mess, and frankly, Im surprised stocks are now down more considering the combo of forces we face. For 12 months now, the credit markets have led the stock markets. How long this world lasts is anyone's guess!
Posted by: Noah | Oct 3, 2008 4:15:29 PM
It was like two entirely different markets: I read the action this morning as a day-scalp, buy the rumor (before the vote) and then sell the news (immediately after) w/ the market rising a bit afterwards towards a flat or maybe even modestly positive close and, then, around 14:00 something big and nasty walked into the room and everyone ran screaming for the door.
Posted by: RW | Oct 3, 2008 4:18:37 PM
I believe the only thing keeping this market up was the threat of a Bear Rally due to some Fed intervention.
Now that we are more certain of the intervention and its likely ineffectiveness, people can sell/short with greater confidence.
Why shouldn't the S&P be 1000 right now? Why not 800? Denial is still prevalent; I still read articles speculating about the possibility of a recession; the blame the shorts / CRA / Mark to Market lunatics still have traction; and our legislative and executive branch do not seem up to the task.
My only reason for optimism is my overwhelming pessimism.
Posted by: Tom M | Oct 3, 2008 4:22:28 PM
Dow - 2000
S&P 500 - 200
Nasdaq - 600
All within the next 1000 days.
So it is written, so it will be done.
Posted by: The Oracle | Oct 3, 2008 4:22:43 PM
IMHO, I think the way the markets sold off this afternoon has a lot of people nervous right this moment for what may lie directly ahead.
Nobody is going to want to hear anything about another package being needed to stabilize the markets. Nobody. If they come back asking for more now, they will lose all credibility what-so-ever.
Posted by: BG | Oct 3, 2008 4:23:36 PM
"We're in the midst of Wave Three crash right now folks. Elliot Wave folks have been calling for this action for the past several months. If 1080 ish zone doesn't hold (61.8% retracement of 2002-2007 advance), then get the hell out of the market immediately."
Can someone tell my why 61.8% is terrible compared to why 61.7% is perfectly fine? I know it's technicals but it just makes no sense on a "big picture" scale.
Posted by: rj | Oct 3, 2008 4:24:29 PM
Heavy in PUTS. I think next week will be down more. No more good news unless Ben drops some more money from the helicopters. but I hear there is gas shortage :)
Posted by: Robert Muncy | Oct 3, 2008 4:25:00 PM
IMHO...
Run to the hills!
Faster you can!
Krugman wrote today that the bill will only buy time. Aparently, very few time...
And Roubini is more gloomy than ever, if that is possible. Sadly, Roubini is right until now, so...
Posted by: João Carlos | Oct 3, 2008 4:26:41 PM
We're just an eyelash above the lows set on the -777 down day. My prediction: .5% (or larger!) interest rate cut, probably coordinated with central banks worldwide, and probably occuring before Sunday eve's opening. Hank and Ben must be sweating bullets, as they're about out of "solutions."
Further liquidity injections remind me of the "pushing on a string" metaphor; excess liquidity got us into this mess, and it ain't helping, so far.
Rescind the swaps already! They really are weapons of financial mass destruction. As they're insurance policies, policies CAN be rescinded. Unwind them so that the banks can trust each other again. With the swaps in place, the banks aren't going to loosen up, no matter how much liquidity is thrown at them.
Posted by: Stan | Oct 3, 2008 4:28:44 PM
Noah, is there anyway we can sell the world short?
Posted by: JustinTheSkeptic | Oct 3, 2008 4:30:50 PM
As usual, a lot of people bought into the generalities, and after the politicians talked they thought they had actually promised something... like market stability and preserving your 401k.
However, the only solid promise is: maybe this will avert utter disaster for 5 weeks. Maybe.
All else is noise.
Posted by: wally | Oct 3, 2008 4:33:24 PM
