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Friday, December 12, 2008

TARP Saves GM, Damages Constitution

Today looked pretty ugly at the start. Treasuries were rallying (and yields collapsing), the index futures were down, and the news was bad. The Senate killed the auto bailout, and the Madoff story really put the integrety of the market into question. So, naturally, we gapped down big and dropped in the first few minutes, then started to rally. News that hit during the day was that the White House decided to use TARP funds to hold the auto makers together until Congress reconvenes in January, and it was into positive territory, even with a late collapse in the TNX.

Technology took a turn leading the market today, and the Nasdaq vastly outperformed the Dow and SPX. The bad news? Low volume.

The Russell 2000 also outperformed today, and and another up day could give us another test of the 50dma.

The semiconductors were one of the big movers today. Notice that the relative strength line just recently bottomed and reversed.

Another big mover was the Dow Jones REIT index, which has made huge down moves on the down days recently. A lot of charts are showing serious resistance at the 50dma, and we are probably going to make another try to get through it.

The auto bailout fiasco is another case of politics as usual. The Republicans opposition seems not to be on ideological grounds, but merely another chance to do some union busting. Congress as a whole has totally dropped the duties given to it by the Constitution. They've given Bush an awful lot of blank checks during his administration, then they can't figure out why he cashes them. The American system has sustained an awful lot of damage in recent years, hopefully it won't take as long to fix it, but I'm not optimistic.

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