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monday update
Sep 16, 2008

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Tony

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SHORT TERM: Lehman fails, market makes new lows, DOW -504

Overnight the Asian markets that were open were all lower. Europe opened lower and closed -3.3%. Over the weekend the FED, Treasury, and several major banks/ibanks met to address LEH's problems. In the end, there were no bidders, and the 157 year old brokerage firm was allowed to fail and file chapter 11 bankruptcy. Also determined at the meetings was the stock swap takeover of MER by BAC, and a new $70 bln loan program put together by the banks: http://apnews.myway.com//article/20080915/D936SJPO0.html. The FED also expanded the debt swap programs from AAA paper to investment grade: http://www.federalreserve.gov/newsevents/press/monetary/20080914a.htm. None of this seemed to help as the US index futures gapped lower in overnight trading, and were trading close to the 1200 area a few hours before the market opened. At 8:30 the Empire State index was reported a much lower then expected contracting -7.4 reading. This was followed by Industrial production which also dropped from a +0.1% to a -1.1%. At the open the market took several minutes to get most of the issues trading. After about 10 minutes the SPX hit 1213, it closed at 1252 on friday. Then in the next hour or so the market rallied to 1237, and that was the high for the day. From about 11:00 on, the market headed lower in a choppy fashion. There were failed bounces at 12:00, 2:00 and then 3:30. However, the SPX broke through 1200 heading into the close to end the day at 1193. For the day the SPX/DOW were -4.55%, and the NDX/NAZ were -3.55%. Bonds soared, Crude broke below $100, Gold rallied, and the Euro was higher. Support for the SPX drops down to 1179 and then 1168, with resistance at 1219 and then 1240. Short term momentum was only slightly oversold at the close and the near term indicators are clearly heading lower. Tomorrow before the open the CPI will be released at 8:30. Then the Home builders index will be reported at 1:00. And, finally the results of the FOMC meeting at 2:00. Today the SPX and WLSH made new bear market lows, joining the NYA and SOX. The count remains the same as we have been posting: Minor waves 1 and 2 complete, and Minor wave 3 underway from SPX 1274. Best to your trading!
MEDIUM TERM: downtrend makes new lows
LONG TERM: bear market
CHARTS:  http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987   

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