(click on chart to enlarge)
CHART AU COURANT: The first (top) chart is the monthly chart of how fast the mighty can fall ($44 to 18 cents in under a year). The lower chart is a close up of the anatomy of denial. It shows hourly bars for the last 3 months of WaMu's life, like the heart beat of a dying man, finally going to zero. So many lies were told during the last 3 months. So many promises broken. So much fraud. On the other hand, as I said in my comments on September 11, Wamu appeared not to have long to live. I said I was going to withdraw my money and move it from the worst bank in the country to the best bank, Wells Fargo. On September 16, my comments were titled "Panic Returns to Wall Street...Market Bottom Due This Week (at least short term)". The market bottomed on September 18th and rocketed 1200 Dow points in 10 market hours (the short term bottom was in). A week later, today in fact, the government has taken over the largest, worst run bank in the country, yes WAMU, and it no longer exists. GONE, Caput, Fini, TOAST! Who's next? Wachovia Bank (WB)? National City (NCC)? You can bet there will be more, even with the bailout package!
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MARKETS: Luckily, and it may be due to the conspirators, WAMU didn't fail last week. If it had, with all the other catastrophic events going on, the odds are high that the system would have imploded, and the FDIC would not have been able to take it, causing the immediate run on most other banks in the country. As it was last week, there was a run on many money market funds, causing the FDIC to begin backing those as well, never done before. JP Morgan Chase will be your new bank, if you had funds in WAMU, which is a good thing. As for Kerry Killinger...good luck in prison, as your days under the microscope have just begun.
As the government on both sides of the aisle play their positioning games at the stake of us poor tax payers, the markets have had enough of the circus. The BAILOUT package is needed to rescue the "system", but will likely usher in selling by the fact that it further degrades the dollar and inflates the national debt. The credit markets are frozen in time, and are dictating the future of the stock market. Since it will take a while to fix the credit markets (at least months, not weeks), the stock market is extremely unlikely to bottom anytime soon, for more than a day or three.
THE MARKETS ARE AT THE HIGHEST RISK OF A CATASTROPHIC SELLING EVENT SINCE 1987. If our lawmakers play politics too long (and I means in hours, not days), we are going to see the "BIG ONE"!
Any break of Dow 10,500 should launch a landslide of selling to at least the 9,500 area, more likely 7,500-8,000 (another short term bottom should be created here). Only an immediate move above 11,500 will postpone the coming slide (perhaps allowing 12k to 12,300 in a panic to buy like last week), which could easily slash another 2,000-4,000 off the Dow this year.
(closed trades are always in black type)
INTERESTING PLAYS TO LIGHTEN UP ON OR SHORT SELL: Currently, there are no open short positions, which usually happens close to market lows. But, stay tuned. We took amazing profits into the Freddie/Fannie failure and will re-short on a reasonable rally. Looking to short the Euro near 1.4900 or higher, near Fibo 50% of prior decline.
INTERESTING PLAYS TO ACCUMULATE OR BUY (if you have to in a dangerous environment): See September 19 posting for profit taking on a lot of former trades. BX under 11, GS under 85, MSFT under 18, YHOO under 20 or above 22 and adding under 13 (entered 19.82 on August 11), GOOG under 390 (entered 389.50 on 9/28, using break even stop as of 10/2, exited at breakeven on 9/29) and under 290, EBAY under 19 (entered 18.50 on 10/6) and adding under 12, DELL under 17 (entered 16.50 9/16) and adding under 10, SMH (entered @ 25 on 9/15 at market open) adding under 21, SLV under 10 adding under 7, SBUX under 13 (entered 12.99 on 10/6), RIMM under 95 (entered 94.99 9/16, exited 99.99 on 9/25, +5.00 or 5.5%) but will re-enter under 63 (re-entered 61.18 on 9/29, stop set at breakeven 10/2, exited breakeven on 10/6) re-entering under 53 (entered 52.99 later on 10/6) and add under 41, AAPL under 135 (entered 134.99 9/16) adding under 90 (entered 2nd time 89.99 on 10/6) and under 65 , INTC under 19 (entered 18.99 9/16) adding under 14. CRM under 45 (entered 44.99 on 9/29) adding under 32. SBUX under 13 (entered 12.99 on 10/6) and adding under 8. And, new additions in the natural resource areas...RIO under 18 (entered 16.88 on 9/29) adding under 8, and PCU under 19 entered 18.88 on 9/29) adding under 8 for 50% pops. SCHN under 28 (entered 27.99 on 10/6). UWM under 32 (entered 31.99 on 10/6) and adding under 24. Long the Euro under 1.3500 (entered 1.3498 on 10/6, placed break even stop on 10/7) adding under 1.3000.
For what it's worth,
Ken
