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Wednesday, August 15, 2007

Another Leg Down

I mentioned yesterday that yesterday's action was a possible bear trap, and that today we might start another bounce. For most of the day it was looking like I was right. The some genius at Merril-Lynch downgraded CFC. Rumors that CFC was going bankrupt started, and it was armageddon. Above is a 1 minute chart of the Dow. Notice the sharp downtrend which accelerated just as it broke through the support line.

A while ago I mentioned that any bad news is going to send the market into a tailspin. A CFC bankruptcy could cause a fuinancial crisis of monumental proportions. However, a stock downgrade is a sign that it is approaching a bottom. Actually, I wouldn't be surprised if someone at Merrill-Lynch doesn't start buying this up like crazy.

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