Okay, I've been silent for awhile, awaiting the markets to get back to business as usual since the Lehman failure and AIG getting booted off the Dow because it was ABOUT to fail. I'm actually unsure, but I don't think any Dow component has ever failed before, and when one is on the brink, that definitely is ominous. It has proved so since.

Once messed up stuff like Lehman's failing (AIG begging for capital, Merryl Lynch selling itself) starts happening and you know the shit is truly hitting the fan, it is time to throw any and all technicals out the window. It is news and emotions that drive the markets in conditions such as these. Indeed, any oscillator in the world I'm sure said the Dow was oversold 300 points ago. In todays case, the market took additional steps into the Abyss when it was clear the bailout bill wasn't going to pass. Fear took over. This is the second “Black Monday” in a month and third this year... and let's not forget 1987's Black Monday. I think there's a big reason a lot of this crap lands on Mondays: over the weekend, “stuff” can happen and, well, the market can react rather badly to it. Add to that, today the rescue bill being voted down in the US, and you get a pretty panicky market. Look what happened at 1:30 today.

Oh yeah Wachovia got bought by Citi, which is pretty much what I expected. However that on any other day would have been front page news... since, buried.

Anyway...

Now let's discuss a few things. First, would the market have eventually moved down to present levels and downward regardless of the bill being rejected? We'll never know. Maybe this was just an expedited extension of the present correction, that would have occurred over the long run anyway. But this rescue bill wasn't about stock prices – it was about credit. And ensuring credit market lubrication ensures the rest of the world can continue business. Here at traderscorner.ca, our concern is stock prices. That said, it's always good to be privy of the logistics of the issues, i.e. as an active trader preparing for the price shock that the results of the votes would definitely produce. So moving on...

I hate the term “bailout.” It wasn't to be a bailout. A bailout implies a handout of money to an ailing company. This is an entire financial system that needs a push to make sure business can continue as usual: houses can be purchased, payrolls can be done, businesses can expand. This likely would have been a profitable deal for the American taxpayer – hardly a bailout.