Monday, October 06, 2008
Bailout Blues
The markets fell again to new lows on a very volatile Friday trading session. The Dow lost 157.47 points to close the session at 10,325.38. The SPX declined 15.05 to end at 1,099.23. We still have no play on.
Stocks got off to a very positive start Friday with the Dow up over 300 points. And these gains were seen on the back of a worse than expected nonfarm payrolls release. For September, payrolls were down by 159,000, which was much worse than expectations for a reading near 100,000. Despite this negative news, stocks seemed to find strength on hopes Congress would pass the revised bailout plan.
And then it happened.......after some arm twisting and downright bribery, Congress passed the $700b bailout bill. And what happened. The markets "sold the news" and went down heavily as traders were probably not keen to keep on positions over the weekend. Not that you can ever trust anything you hear on CNBC but one trader I saw was saying there is a recognition that the bailout plan won’t solve the problems in the credit markets, but that without it, a complete freezing of credit might have occurred. Now traders are concerned that a lot of damage has already been done and that the U.S. economy is already in a recession.
I think the markets will still go lower and then perhaps bounce. I say lower because I watching closely Friday and the only reason the markets didn't go lower was because the bell went!!!
Until next time.
Stocks got off to a very positive start Friday with the Dow up over 300 points. And these gains were seen on the back of a worse than expected nonfarm payrolls release. For September, payrolls were down by 159,000, which was much worse than expectations for a reading near 100,000. Despite this negative news, stocks seemed to find strength on hopes Congress would pass the revised bailout plan.
And then it happened.......after some arm twisting and downright bribery, Congress passed the $700b bailout bill. And what happened. The markets "sold the news" and went down heavily as traders were probably not keen to keep on positions over the weekend. Not that you can ever trust anything you hear on CNBC but one trader I saw was saying there is a recognition that the bailout plan won’t solve the problems in the credit markets, but that without it, a complete freezing of credit might have occurred. Now traders are concerned that a lot of damage has already been done and that the U.S. economy is already in a recession.
I think the markets will still go lower and then perhaps bounce. I say lower because I watching closely Friday and the only reason the markets didn't go lower was because the bell went!!!
Until next time.
# posted by Paul @ 4:32 AM 
