Sep 30, 2008 - Requested Chart Analysis - IBM

The following chart is for International Business Machine (IBM)

Market Wrap - ‘Bail out’ Bill Going to the Senate Wednesday Night

In late breaking news tonight, we have learned that both sides of the Senate have agreed to take up a vote on the bailout bill. The details we know at this time, are that the Senate will add the current bailout bill to another bill. Additionally, it is being reported that the revised bill will include an increase to the FDIC insurance from $100,000 to $250,000. 

The bill will be voted on by the full Senate tomorrow evening at sundown. It is then expected to go to the House on Thursday. The questions that remain unclear are: to what existing bill are they attaching the bailout bill; is the FDIC insurance limit the only thing being added; and, what changes will be made to the existing plan? Many questions and no answers.

It would seem that they are now going to try and squeeze this bill through the House, by attaching it to another bill with added provisions.  The purpose would be to grease the skids for a successful vote. Leave it to Washington,D.C. to pull late night ‘behind the door deals’ in order to get this bill passed.

Looks like I will have another late night, as I will be sending faxes to Washington again.

How about that rally today? <yawn>  It was a great daytraders event, but beyond that it remains dangerous waters (see the charts below) to make trades in.

Also coming off the news wires tonight is this…

(US) CNBC’S GASPARINO REPORTS THAT SOME OF THE HOUSE REPUBLICANS ARE PREPARING AN ALTERNATIVE TO PAULSON’S BAILOUT PLAN AS THE GROUP DOES NOT FAVOR THE GOVERNMENT TAKING A BIG ROLE IN MARKETS
- CNBC adds that components of the alternative plan include requiring the Treasury to guarantee, at up to 100%, bank losses resulting from failed MBS originated prior to the plans enactment; Allow companies to carry back losses arising in tax yrs ending in 2007,2008 or 2009 back 5 yrs; Allow a “repatriation window” for profits earned by US firms overseas; Allow banks to treat losses on shares of preferred stock in the GSEs as ordinary losses and not as capital losses; Suspend the capital gains tax rate for 2 yrs; Limit backing of high-risk loans by the GSEs; Schedule Fannie and Freddie for privatization; Suspend mark to market accounting until the SEC can issue new guidelines that will enable firms to mark these assets to their true economic value; Stabilize the USD by repealing the Humphrey-Hawkins Full Employment Act, which some say diverts the  Fed’s attention from long-term price stability to short-term economic growth;  Require the Treasury to write rules prohibiting excessive compensation to executives of failed companies; Task the SEC with regular, annual audit reports of entities the federal government has brought under conservatorship or now owns.
- Earlier it was reported that the House GOP members were seen supporting the Senate’s bailout proposal.

All that glitters IS gold:

• REPORTEDLY THE HOLDINGS OF THE SPDR GOLD TRUST (GLD) ROSE BY 4.2% TO 755.2 TONS ON OCT 1, WHICH IS A RECORD
• FINANCIAL TIMES  REPORTS THAT WEALTHY INVESTORS ARE STARTING TO HOARD GOLD.

After a 777 point decline in the Dow Industrials it hardly seems like a big deal to have a 485 point recovery. The only significant event was the S&P 500 did not remain below the channel and the resistance did not hold. I have marked the next significant resistance levels.

The Dow stayed within the channel as I suspected it would, and the Nasdaq is still below its significant resistance level.

 

 

Market Close

We’re up because the bailout failed…no, we’re up because people believe the politicians who say a bailout bill WILL be passed before the week is out…no, we’re up on technicals…or, end of quarter shenanigans?

The markets erased much of the loss from yesterday, take your pick of reasons why.  Volume was unimpressive, and it felt like just another day.  But, maybe I’m just becoming jaded over these wild 300+ swings in the Dow.

Bailout or no bailout, maybe some are excited over the prospects that the government entities are not finished changing the rules to benefit the banks:

SEC REPORTEDLY PROPOSING THAT COMPANY’S ESTIMATES SHOULD BE USED FOR FAIR VALUE ACCOUNTING WHEN A MARKET NONEXISTENT
- Note earlier today the SEC was meeting with the FASB discussing possible amendments to fair value accounting and that an announcement may be pending later in the week
- the SEC evaluating whether accounting via fair value methods created transactions that became distressed and forced given the fact that there could be no determination made, and believes that certain vague markets should act as part of the equation but not on the whole

FASB GUIDANCE REPORTEDLY TO BE CONSISTENT WITH MARK-TO-MARKET RULE

This proposal by the FDIC seems to be similar to what the Irish did yesterday, here’s the story link.

FDIC’S BAIR: FDIC LOOKING TO INCREASE DEPOSIT INSURANCE LIMITS ON TEMPORARY BASIS
- Note US Rep Frank noted earlier in the day that the FDIC was exploring this possibility

Dow Daily Chart

Bailout, Rescue, TARP, EESA: By any other name

I do not usually listen to financial media, but I have been listening to CNBC the last two days.  Curiosity, mostly, as I wanted to hear the reaction to the failure of the bailout bill.  I am completely sickened by the anchors and the guests (analysts and politicians, alike).  These people are, without a doubt, showing their total disdain for the American people.  Wow, I’m really floored.  I had no idea we were too stupid to understand even the basics of the economy.  Apparently, not one American (outside of politics/media) understands how banks/money/business work, so average Americans are not qualified to have a say in whether or not a "rescue" occurs. 

I say again, Main Street can weather this crisis better than Wall Street can, as long as the government stays out of the way.

Don’t Like Reality? Just Don’t Report It

MARKIT FINANCIAL SERVICES TO DELAY UPDATES FOR ITS NORTH AMERICAN AND EM DEFAULT SWAP CDX INDICES
- Markit CDX rolls have been postponed at dealer request.
- Dealers voted to postpone the rolls due to market conditions and requests from their clients.
- Note  the last time Markit delayed  was Sep 15th,  one day prior to Lehman’s collapse
- Indices Affected : Markit CDX North America Investment Grade, Markit CDX North America Investment Grade High Volatility, Markit CDX North America Crossover, Markit CDX Emerging Markets and Markit CDX Emerging Markets Diversified indices.

Pre Market - Wait and See

Pre market futures are up but I don’t put much into that as we have to see how the day ends.

President Bush makes another appeal to Congress to pass the bail out bill and the media continues the blame game. We have to wait and see what the market gives us to work with. Don’t get too excited if the market rally’s today.. The long term projection is still down.

JUL S&P/CASESHILLER-20 Y/Y: -16.3% V -16.0%E; HOME PRICE INDEX: 166.2 V 166.9E
- No revisions
- Largest monthly price decline in Index’s 21-year history.

Market Video is Now Available

Special Video Update Will be Posted Shortly

I have created a new video of chart analysis and commentary. It will be posted shortly.

Market Summary-NO Vote on Rescue Plan!

The American people said, "NO, we do not want to spend $700B on a problem the majority of us didn’t create."  Congress did the right thing for the country.  The media (and, apologetically me) believed the rescue bill would be passed with a landslide majority.  Our politicians stunned us by slapping down the "rescue", and the market reacted negatively to the unexpected developments.  Will this economic mess be tossed back into the lap of Wall Street?  Will Congress try to change the bill and bring it back for a vote?  We will have to wait and see.  Everyone who voted against this bill deserves a BIG thank you.  How did your Representative vote?  See this LINK for the breakdown of Yeas and Nays.  The defeat of this bill does not mean the war is over, but it was a victory for Americans.  The fight against the next bill offered is just as important as the one defeated today.  I hope this was the real wake-up call that Main Street America needed, to REALLY get involved in protecting their Constitution. Election years should not be what they have become…complacent acceptance of the "status quo."  You don’t have to drape yourself with the flag to be a protector, a champion, of freedom.  Even if you just want the freedom to sit around watching TV and eating Twinkies! :) 

Seriously, Americans just want the opportunity to take care of themselves and their families, without government interference.  We want to go to work, pay our bills, and live our lives the way we see fit, without interfering with others’ rights to do the same.  ‘Ya can’t do that without freedom. 

CNBC anchors and guests are apoplectic over the failure of this bill.  They are pushing the "threat" that Main Street just doesn’t get it, that we are wrong to oppose this (even heard that we are "special interest" groups LOL).  Someone needs to explain how these investment banks and other banks managed to get the US economy to the so-called "brink of disaster!"  Where are the indictments for such a vicious act?  Let us know where to place the blame for this mess, then MAYBE we will believe the next thing out of a politician’s mouth.  But, you politicians better stop "threatening" us with lost jobs, no credit, and grandmothers starving in the refuse-strewn alleys.  FACTS!  How about some dang FACTS, instead of the emotion.  I have a feeling Main Street will be able to weather this "crisis" better than Wall Street.  Many of you know I am a staunch capitalist, but what we are witnessing in the financial/government sector is NOT capitalism, it’s criminal.

Where do we go from here?  Chuck is posting charts later this evening.  The Dow closed down 777.68, Nasdaq down 199.61, S&P down 106.59.  Wow.

CITIGROUP MOVED TO "NOT RATED" AT GOLDMAN SACHS

VIX VOLATILITY INDEX HITS HIGHEST LEVEL SINCE THE MARKET OPENED ON 9/21/01 POST-911
- the index reached 48.40 a few minutes ago, nearing the post-911 spike of 49.35, which was the all time high in the VIX

Rescue Plan To Be Voted On Soon

Seems everyone is waiting on the US government to decide what kind of "rescue" they will provide.  I covered some shorts, and will wait until an announcement is made.  In the meantime, here’s some news:

REPORTEDLY THE HOUSE WILL VOTE AROUND 1PM EST ON THE FINANCIAL RESCUE PACKAGE - CNBC

FED ANNOUNCES NEW INITIATIVES TO COMBAT GLOBAL LIQUIDITY CONCERNS: INCREASES 84 DAY TAF AUCTION TO $75B; TOTAL FXSWAPS LINES WITH CENTRAL BANKS RAISED TO $620B FROM $290B PRIOR
- Fed says move directed at year-end funding concerns

AUG CHICAGO FED MANUFACTURING:  103.5 V 106.2 PRIOR (2.6% DECLINE)

DALLAS FED REPORTS TEXAS MANUFACTURING OUTPUT INDEX AT -21.4 IN SEPT VS. 0.0 IN AUG

AUG PERSONAL INCOME: 0.5% V 0.2%E; PERSONAL SPENDING: 0.0% V 0.2%E

AUG PCE CORE M/M: 0.2% V 0.2%E;  PCE CORE Y/Y: 2.6% V 2.4%E; PCE DEFLATOR Y/Y: 4.5% V 4.5%E
- Price PCE Core YoY revised 2.4% to 2.5%
- Prior PCE deflator YoY revised from 4.5% to 4.6%

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