We are now back to the depths of the July carnage - S&P 1200. If this does not hold, it would be very worrisome. Again, you can bet "they" will defend it like they did successfully on the first few tries this morning at 1215.
I said earlier that if Merrill (MER) goes it will be interesting to see what they do to Morgan Stanley (MS)... well right now it's not pretty. Even Goldman Sachs (GS) is being destroyed. Those are the 2 last independent investment banks. Both report in next 2 days and along with the Federal Reserve meeting - anything can happen. We could be up 3% or down 3% tomorrow. The action continues to be dangerous as I've been saying week after week.
Goldman Sachs (GS) is before the bell tomorrow so something positive there, along with hopes for a Fed rate cut could turn this market on a dime. Or not. Such binary action - quite amazing.
Morgan Stanley and Goldman Sachs were both down around 14-16% before "rallying out of thin air" to only be down 7-11% -- hmm, how curious ;) Again I would not be surprised to see a number from Goldman that "they" can use as an excuse to rally this market up 3% tomorrow. It happened just a week ago - up 3% on Fannie/Freddie bailout, and then lost it all the very next day. Curious forces are at work behind the scenes.
We do indeed live in interesting times.
EDIT @ 4:10 PM : that was a very weak defense. We had one bounce there @ 3:30 PM right at 1200 and then just a tailspin into the close. That bodes very ill. If not for Goldman possibly providing some knee jerk bounce tomorrow I'd be extremely negative. We'll see what they have up their multiple sleeves. p.s. could someone tell me why financial stocks rallied from July 15th forward? Also can one pundit who showed up a week ago today telling us the bottom was in due to bailout of Fannie/Freddie please show his face and say "oops"? Just one?
Here is today's action
p.s.s. we've had a rough time of it of late as we've been high in cash levels, hedged in areas the market is running up on "thesis" instead of fact, and our long positions have not been treated very well in this market of "buy financials because the worst is behind us" and "buy consumer discretionary because everything will be fine in 6 months - but only in the USA as the rest of the world crumbles - so sell global growth stocks". So we lost some money today but I'm confidant compared to most funds readers might own we outperformed just about any equity fund out there. Small victories I suppose.
Now the danger is tomorrow could be a complete reversal of today, as this market has no memory from day to day, and the market could be up 3% and we look like a laggard again. Or it could be down another 3%. Who knows. VIX crossed over 30 at least (volatility index) - over 30 has usually signaled fear is high and we are close to an intermediate bottom.
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