Wednesday, September 17, 2008

Mid-Week Views of a Bearish Market

* Getting Short When You Can - Short sellers kept it up until the very end of the trading session; after midnight, we're back to restricting naked short sales.

* Risk Aversion Gone Wild - The yield on 3-month T-bills dropped to .04, as investors sought a safe haven. The same desire for a safe haven launched gold (GLD) over 10%. Note how the U.S. dollar is once again under pressure; if the government assumes the bad debt of banks, it stops looking so creditworthy itself. Meanwhile, long-dated muni bonds hit a record spread vs. Treasury bonds.

* Continued Weakness - Across the NYSE, NASDAQ, and ASE on Wednesday, we had 361 new 20-day highs against 3631 lows. 52-week lows among the three exchanges dropped to 1999 from 2225 on Tuesday.

* What Went Wrong - Kirk reviews articles on Wall St.'s woes and makes the case against bailouts.

* A New RTC? Lots of buzz about the government taking over bad bank debt; Abnormal Returns finds links and other perspectives on the credit dilemma.

* Emerging Woes - As bad as we have it, China and Russia's markets have had it worse; Trader Mike updates his links.

* The Trauma of Loss - Stuart Schneiderman offers thoughtful views on dealing with catastrophic losses.

* Looking for Support - Market Rewind offers an interesting perspective on SPX support.