Friday, October 10, 2008

The Question You Have to Ask Yourself, Punk, Is Do You Feel Lucky? Well Do You?

Only about 90 minutes of trading left and we're still sitting around the -400 point level. Like someone said "Down 400 is new Down 100".

This might get ugly into the close, if people that bought the bounce this morning sell aggressively into the close. Fear is surprisingly pervasive and the fear that something major (positive or negative) could come out over the weekend makes holding stocks a difficult proposition.

Expect the Fed and Treasury to talk up a plan like the one England instituted this weekend. In essence we'd be propping up the capital bases of the banks and guaranteeing interbank lending. Again, that's a quick fix but it will improve credit market liquidity. The problem is that even the good banks with fresh capital will face another leg down when the good assets start to go bad.

I hate to draw parallels with the market in 1929-32 because so many things are different today, but if you go back and look at the bottoming process that occurred, those that bought the first dips were not rewarded for their aggression.

Cheers! Treat yourself to an adult beverage tonight if you can still afford it.

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