DJIM #38, 2008

We all knew this saga was going to come to an end sooner or later, we just didn't how or when!    For most of market participants' sake,  this financial crisis is better off ending now than later.    So, here comes the finally!    In addition to the transformation/ transparency of the financial model(s), trading rules, as we know it,  we also have the proposal to bail out the entire bad sub-prime assets!    This is being proposed by the current administration as we speak and it will cost around 700 billion!     To put this number in perspective, current U.S. deficit is around 10.6 trillion and this will effectively increase the deficit by nearly 7%!

The good thing about this rescue is that it will absolutely stop the bleeding of our financial market.   For most financial company executives, except Lehman's, of course,  they can breath a sigh of relief!    Chances are, with this bailout plan, we should not see any more big institutions go under anytime soon!    This will also cause an immediate stop to the constant selling due to the headlines regarding write-downs and capital injection etc.    In most eyes, this action may have finally effectively put a "short" term bottom in this market.  An opportunity for a fresh start is what we all seek.

Now, the bad thing you may say is this bailout plan is that it doesn't address any market concern other than the financial sector.    We also don't really want to get into the discussion of the sudden increase of U.S. deficit as they have been printing money for a long while now.   Hopefully, market's attention will slowly, but surely turn back onto the economy and earnings this upcoming earning season.

With two of the rockiest trading weeks behind us, we are actually looking forward to the rest of the month and beyond.    Whatever the opportunities or misses you think you could've played,  just leave those thoughts behind you now.  To be honest, looking at the DJIA/ SPX flat week close, if you took the week off...you didn't miss anything!..lol.   Without constantly having the market at the mercy of the headlines of financial institution fumbles,   we can finally and rationally make some logical trading decisions from this point on.     Also, with the stabilization of the financial market,  we don't expect that many more 400 point swing, so we can better manage our trading game.   Bottom line,  it's time to leave our gambling mentality and get back into trading zone.

Lot`s of work to do this Q, as we see below...

Equities            1-day/week/month/YTD
S&P 500   1255  4.0%   0.3% -1.8%  -14.5%
NASDAQ   1745  2.8% -1.2% -8.5%  -16.3%
DJIA         11388 3.3% -0.3% -0.4%  -14.1%
FTSE          5311 9.6% -0.1% -5.2% -30.5%