MON. OCT. 6- Bill Passage Didn't Help

So, on Friday, the House passed the Senate bill giving power to the $700 billion rescue for the banking system, subprime mortgages, and of course provisions set aside for such entities as manufacturers of wooden arrows. And what was the market’s reaction? An evaporation of a 300 point Dow rally following the Wachovia-Wells Fargo tie-up. The reason? Because nobody knows exactly what will happen now. The reality of the situation is that the world’s economies are in rather dire shape. We do have a deal in place via Congress, but what is the framework for said deal? What is the value for everything? How long will it take to disburse the money? The problem now in this deepening crisis is one of confidence. While it is great that people like Warren Buffett are willing to close his eyes and have confidence in America, everyone else needs to do so in order for things to get going again. People with credit scores of 675-700 are routinely getting turned down for car loans. This is not a Wall Street problem. It is a Main Street problem. The fact that the equities markets closed on their absolute lows on Friday with no major catalyst to spark it higher simply is not good to put it mildly. What occurred politically on Friday is akin to buying a house which needs a lot of work; sometimes, it can take upwards of a year to get that house. When you get the house, you are relieved that you finally have a residence. Then now that you have that house, you realize you need a new kitchen, a new bathroom, that air conditioner needs replacing, and so forth. And oh, you have only a few days to get all of the work done because your mother-in-law is moving in so the house needs to be perfect. This is where we are now. And if there are no immediate-term answers, it is going to get very scary very fast.

Overnight, markets were drilled throughout the world. European and Asian markets were down anywhere between 4% and 6% across the board. Anything can happen at anytime today. Trading will be rumor-driven and very emotional today so be careful and be very nimble.


Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


Good-

WFC- stunningly closed lower on Friday after its WB announcement; in a decent market, should be one of the first big banks to rally on short covering

NUE- mentioned on Cramer’s show; should be good for short covering if market rallies

STT_ got contract from government to handle MBS’s in bailout; should be stronger than most financials all day

DRYS- announced it is actually expanding its operations. Shocking in a market like this and simply shows company has confidence in itself; if it opens lower and goes positive, looking to buy thru unch.

HIG- received capital infusion

Bad-

CBL, FR, CBG- among other property stocks down on Friday; rallied into close, but may see more follow-through selling today

MHH- drubbed; wonder if it inches toward zero today

ARA- down hard on Friday; looking to short thru unch if market opens higher

X, AKS- tried to rally and failed; in a good environment, these will snap right back after at least holding positive ground Friday

CSIQ, FSLR, SPWRA- among other solars, this group got crushed last week with falling oil; if they open lower today and market rallies, buy them…buy also on an A-B-A2 off of the open if market opens up

YRCW- major trucker suddenly in danger of collapse; in market weakness, looking to short thru Friday’s low of 7.42 if not a tad before

PLD- extremely weak on Friday; looking for follow through to downside if market weak

NYX/MAC- bizarrely weak on Friday; looking for a bounce in market strength off of open
Good luck today.

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