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Friday, October 3, 2008

Where's The Rally?

In the world of the warrior, seppuku was a deed of bravery that was admirable in a samurai who knew he was defeated, disgraced, or mortally wounded. It meant that he could end his days with his transgressions wiped away and with his reputation not merely intact but actually enhanced. The cutting of the abdomen released the samurai’s spirit in the most dramatic fashion, but it was an extremely painful and unpleasant way to die, and sometimes the samurai who was performing the act asked a loyal comrade to cut off his head at the moment of agony.

- Stephen Turnbull, Samurai: The World Of The Warrior

Not that I am suggesting anyone cut their guts out here, but I think it is about time for Paulson and Bernanke to fall on their swords, figuratively. They have been either blindsided by this crisis that was painfully obvious over a year ago, or they have been lying through their teeth. In either case, neither deserves to keep his job, and I don't think we can afford to keep them at the helm, as we flounder from one iceberg to another.

Above is two days of the SPX, one minute at a time. We got a nice gap up today, and a pretty decent rally, right up until the news came through that the bill passed (point 1). A classic case of "sell the news" started, and we sold off, leveling off just in time to go into another dive when Bush signed the bill into law (point 2), again starting another selloff, which again abated until Bush opened his mouth (point 3), at which we sold off into the close.

The SPX, weekly, at a 3 year low. I'll have to find another chart as stockcharts' free charts only go back 3 years.

The Nasdaq weekly, breaking the summer 2006 low and also at a 3 year low. The magnitude of this week's move is incredible, dwarfing any previous week in the last 3 years.

The Russell 2000, at a new 3 year low close, but still hanging above the October 2005 swing low. Again, just look at the magnitude of this week's move. I would say investor confidence is not very high.

The 90 day Treasury yield, which has been below 1% for 3 weeks now. I suspect we might get an emergency rate cut before Monday's open.

I saw a quote today (which I failed to save, so I don't know who it was) from a Congressman who changed his vote from No to Yes did so because severl of his constituents complained about the losses they took in the market on Monday. I'll bet they feel a lot better now.

I probably will not have an updated earnings sheet until tomorrow, but there will only be one change on it. CALM had a negative quarter and will be coming off.

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