Wednesday, September 10, 2008
After Fannie Lehman Spoil the Party
I didn't post yesterday but you probably saw that the markets...surprisingly in my view....rallied strongly on the news that the Fed was bailing out Freddie and Fannie.
Well on Tueday all those hard earned gains were wiped out and then some on the back of again rubbish news in the financial sector. The Dow fell 280.01 points to close the session at 11,230.73. The SPX gave up a massive 43.28 points to end on 1,224.51. We are in the green and looking good.
We are really trying to close this trade but not really getting any help from the market makers!!
All the excitement about Freddie and Fannie faded Tuesday as traders digested a huge drop in shares of Lehman Brothers (LEH). LEH wasn’t the only financial stock to see large losses with AIG (AIG) off 19.3 percent and American Express (AXP) down 5.6 percent.
LEH shares really took a hit, falling 44.9 percent to a price of $7.79. The stock suffered on news the Korea Development Bank was no longer talking with LEH about buying shares or making a large capital investment. Standard and Poor’s also put the company on its CreditWatch with not good implications. LEH has really suffered like Bear Stearns before it. Chances are that this bank will also go bust. The stock was trading near $65 at the beginning of the year!! A few puts on this stock might be worth a punt!
Oil prices also dropped Monday but this is now being seen as a negative thing which also helped contribute to the selloff in stocks Tuesday as well. Several months ago, traders were looking for a decline in crude prices to boost consumer sentiment and push stocks higher. Now the decline in oil is being seen as a sign that economic slowing is occurring across the globe!! On Tuesday, crude fell $3.08 a barrel to $103.26, with reports that OPEC will leave production quotas unchanged also providing a bearish day for the commodity.
If the markets are going down when oil goes down and down when oil goes up then that to me does not sound good!!!
Until next time.
Well on Tueday all those hard earned gains were wiped out and then some on the back of again rubbish news in the financial sector. The Dow fell 280.01 points to close the session at 11,230.73. The SPX gave up a massive 43.28 points to end on 1,224.51. We are in the green and looking good.
We are really trying to close this trade but not really getting any help from the market makers!!
All the excitement about Freddie and Fannie faded Tuesday as traders digested a huge drop in shares of Lehman Brothers (LEH). LEH wasn’t the only financial stock to see large losses with AIG (AIG) off 19.3 percent and American Express (AXP) down 5.6 percent.
LEH shares really took a hit, falling 44.9 percent to a price of $7.79. The stock suffered on news the Korea Development Bank was no longer talking with LEH about buying shares or making a large capital investment. Standard and Poor’s also put the company on its CreditWatch with not good implications. LEH has really suffered like Bear Stearns before it. Chances are that this bank will also go bust. The stock was trading near $65 at the beginning of the year!! A few puts on this stock might be worth a punt!
Oil prices also dropped Monday but this is now being seen as a negative thing which also helped contribute to the selloff in stocks Tuesday as well. Several months ago, traders were looking for a decline in crude prices to boost consumer sentiment and push stocks higher. Now the decline in oil is being seen as a sign that economic slowing is occurring across the globe!! On Tuesday, crude fell $3.08 a barrel to $103.26, with reports that OPEC will leave production quotas unchanged also providing a bearish day for the commodity.
If the markets are going down when oil goes down and down when oil goes up then that to me does not sound good!!!
Until next time.
# posted by Paul @ 3:50 AM 
