Friday, October 10, 2008

Capitulation at 8000 -- maybe!

So, do we have capitulation, finally? Was 8000 the floor, after all?

Mike Hubert weighs in on this question ("Market timing converts) here.

As the markets opened, the Dow fell about 700 more points (below 8000) in the first 15 minutes, and then took a leopard’s bounce right back into positive territory briefly. It seemed encourage while Obama spoke and then tanked some as President Bush spoke. (Here is the White House copy of the president's statement. Then the Dow tanked through the noon hour.

Then came the news that the Lehman Brothers auction had settled, at 8.625%. That was less than the expected 11%, but it seems that having the cash from the auction cheered the markets. They almost got into positive territory before settling at -128 (8451), or about -1.5%. The Nasdaq actually finished up +4, or .27%, and the S&P 500 finished slightly below 900, at -1 %.

Lehman has another act. The AP reports (check Yahoo!) that sellers of insurance on bonds from Lehman will have to pay out at 91% (because of the remainder from the auction). That would be important to holders of mutual funds with major mixes bond components. If this money can be collected, those bond share values could improve again in the future.

ING rose 3%, but ExxonMobil fell another 8%. Oil prices will not stay low for long.

Tomorrow, the big boys from the G7 meet at the IMF in Washington, and there will be no “Battle in Seattle.”

Here’s a New York Times blog entry from Sept. 16 about a lawsuit against Fannie Mae brought by holders of preferred shares. Can the government just taketh away like that?

There is a lot of discussion today about short selling as beneficial to the market, in actually giving investors the money to buy other shares, ultimately helping prices. What about “shorting against the box”?

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