MV Weather Report: Big Chill for S&P 500
Rain or shine, we review the day's biggest stock stories.
This market has definitely gotten ugly. AIG (AIG) moved the market early this morning. In case you spent the day under a rock: The government now has a 77.9% equity stake in AIG, and will also provide the company with $30 billion more in cash.
For the whole story, see Two Ways or Professor Depew's Five Things. Here's what Toddo had to say:
"If you were a credit bear, why wouldn't you press your bets? The sense on the Street is that the government will backstop your bets (thereby reducing counter-party risk) with the burden borne by tax-payers. The irony of ironies is that when they pushed for the first traunche of the trillions of dollars in stimuli, they warned that if we didn't do it, we would see... well, what we're seeing now."
Today's action could be seen as forced selling, since market participates need to raise cash. The S&P 500 traded as low as 699, but closed right at 700. The S&P 500 hasn't seen these levels since 1996 - when Bill Clinton was president, the Dallas Cowboys won the Super Bowl, and I was still in elementary school.
There's no doubt that the market is now reaching a panic level. But you could have said the same thing back at 900 or 1000. Will we still be at panic level at 500 or 600? Do we get that this year?
Here's what Bennet Sedacca had this to say on the Buzz: "Although I think we ultimately have a date with 400-500 SPX, some of the valuations and the quality of the balance sheets in these groups is compelling."
Bennett dipped his toe in by using the ETFs: Healthcare (XLV), Energy (XLE) and Crude (OIL). Toddo also made purchases in front of Turnaround Tuesday: "With the S&P at 700--and a long-term eye towards 600, Gawdfabid--I've made some small option nibbles in Boeing (BA), Intel (INTC), Research In Motion (RIMM), Ultra S&P (SSO) and BHP Billiton (BHP)."
Of those names, my favorites are Research in Motion and the SSO, which I use to quickly gain market exposure. (Which also happens to be all you need in this kind of tape.)
As for Turnaround Tuesday, there isn't much on deck. Tomorrow will be an important day for the bulls. It's never wise to catch a falling knife; right now, the market has no bottom in sight. As for the radar, Pending Home sales are due at 10:00 a.m.
Have a great night, Minyans!
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