S&P closed at 823, only because they rang the closing bell. It finished up eleventy percent on the Geithner Plan. Short-term we are beaucoup overbought and we might need a down-tick rule to slow this mf'er down. I would think the markets should drift lower for the rest of the week, consolidating the recent gains towards the 765 area. Overhead resistance is at 838 and 850. Support is at 805 and 780.
Now this is where it gets really confusing for me. I'm unable to determine if we are currently in an A-B-C corrective wave up from the yet to be completed downward 3, that I felt would be at 642, or was 666 the completion of the downward 3 and we are in the midst of the huge upward 4 before heading back down? These are the two scenarios I mull over when coming up with the projections. Perhaps the market tinkers around till the next earnings cycle. In order to move this market to new lows in the near term it's going to take some bombshell news/event, say like GM filing. That's not so unexpected but could be a catalyst for selling. I could also see this "Geithner Plan" getting derailed along the way.
Nothing about the 666 is something I wanted to see a bottom made of. It was artificial and zero changed with the fundamentals. I realize the market is speculating on a second half recovery which is why we must yield. A variety of technicals that I track on the daily charts have reached highs matching that of 2007 which is why the market needs to work off these gains. However, the weekly charts show there is room to move higher. Some people suggest throwing the technicals away in this market but I beg to differ.
The Plan
We finally got to see the plan for the non-recourse loans the Fed is handing out by way of the FDIC in order for private capital to pay a price closer to what the banks think they are worth. The buyer only needs 7% of the money/risk for most of the upside, leaving us with the other 93%.
Anyone want to bet there aren't some dirty games that go on in this bidding process that effectively puts the capital in the hands of the bank and moves the risk to the balance sheet of the taxpayer? Just how many degrees of separation are their from private equity and these banks? Who's to say they don't bid up their own assets indirectly? It's a stealth way to capitalize the banks to the tune of $1T without having to go to CONgress asking for another round of "bailout" capital. Sure there will be legit uses of this program but can you really trust these guys any longer? Geithner is a toxic asset himself and needs to be put on someone else'sbalance sheet.
