A global sell-off and record-breaking risk aversion efforts attempt to bring in bargain-hunters, but a deceased Brother Lehman is still managing to haunt investors. As of 10:40 ET the “SPYder” (SPY) and “Cubes” (QQQQ) are shedding 2.70% to 3.20% on heavier daytrading efforts in a still mad money market.
The Dow fell below 8,000 for the first time since 2003 on ever-escalating and record-breaking fear mongering of very generous and tactful government efforts to date would still prove impotent for world economies. A global overnight route spearheaded by the collapse of Japan’s Yamato Life Insurance, saw the Nikkei sink nearly 10% on top of existing losses.
At the same time, sympathy responses and forced selling made less liquid markets such as Russia and Indonesia to suspend trading entirely. That being said and stateside, if you blinked, rather than seeing “Dow 8,000!” on the ticker—all you saw were headlines as minutes later “Dow 8500!” was nearly the very, very fast new reality of traders trusty, well kind of, five-minute chart.
In the current five-minute candlestick, the latest and not so greatest reality causing further alarm after bulls noshed equities back to the unchanged marker—is a not so swell auction of Lehman’s CDS portfolio, which will be completed today. Per Bloomberg and intraday, an initial and lowly auction value of 9.75 cents on the Ben Franklin is finding equity traders, “schnitzeling a little” from out-the-gate cleansing efforts.
Elsewhere and keeping sentiment and prices of the grizzly variety, Anchor Bankers (XLF) Morgan Stanley (MS) and Goldman (GS) are under review for downgrades at credit ratings agency Moody’s, regarding their long-term credit prospects. Shares of MS and GS are tumbling 18% to 35% respectively. Separately and also not helping matters, slightly earlier reassurance testimony from Dubya regarding the credit scandal / crisis failed to lift bulls into bargain hunting proclivities that go beyond Friday’s deepened discounts.
For the more intermediate-minded bull, which is all of about the length of a sixty-minute candle these days, shares of General Electric (GE) are doing their darndest to shake off some of the market’s toxic sentiment. The influential conglomerate posted in-line 10% quarterly drop in profits this morning. The company furthered potential relief efforts by failing (a good thing) to dredge up additional financial dirt regarding credit worries over its GE Capital unit. Intraday, shares of GE are still trying, by a thread, to bring good things to the lives of investors with shares up a nickel at 19.06.
In passing, a couple of other “good” reports from Wells Fargo (WFC) and Chevron (CVX) are also failing to find bulls willing to sink their teeth into those stories. For its part, Wells has become the custody winner of the whacked down Wachovia (WB) in taking 100% of that Anchor Bankers investment and deposit business from the clutches of a FDIC-backed Citigroup (C). Intraday, shares of WFC are off .15 at 27.10. Separately, shares of Chevron are tanking by more than 10% to 57.60 despite announcing Q3 profits to come in above last quarter’s results.
And finally, historic and mind boggling oversold conditions continue to saturate The Street with bloodied bulls. Potential market drivers like a pleasant surprise from Lehman and maybe a bit more from General Electric are now a bit of history, while unnerving sentiment and stock prices continue to pressure bulls into seeing and fulfilling the worst market correction in 35 years. When will it end? Nobody knows, but likely exhaustion should be very close at hand and definitely before any bids marked at zero ever get filled. Be safe and Godspeed.
Chris Tyler
Staff Writer & Options Strategist
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