Perhaps one good development from Friday's Bear Stearns induced selloff was that the VIX finally got back above 30. Real fear is starting to seep into the market.
And speaking of Bear Stearns (BSC), there's now talk of JPMorgan Chase (JPM) acquiring them for $20/share. Yes, a take-under! People who bought BSC on Friday who thought they were getting a bargain are going to be real upset if this comes to pass. There's a reason why the saying "don't catch a falling knife" exists.
Update: OK, scratch the $20 thing, the deal was done at $2 per share!!!!! Simply amazing.
JPMorgan Chase said Sunday it will acquire rival Bear Stearns in a deal valued at $236.2 million -- or $2 a share -- a stunning collapse for one of the world's largest and most venerable investment banks.
The last-minute buyout was aimed at averting a Bear Stearns bankruptcy and a spreading crisis of confidence in the global financial system.
The Federal Reserve and the U.S. government swiftly approved the all-stock deal, showing the urgency of completing the deal before world markets opened.
Here's the Broker / Dealer index, which held up pretty well considering how bad BSC weighed on it on Friday:
I had Goldman Sachs on my screen on Friday and was struck at how chaotic & choppy the trading in GS had been over the last week or so. One could either make a killing or get chopped to bits with this kind of action:
Finally, here are the index charts. It's uncanny how often the indices come to rest at an important technical level ahead of a Fed meeting. This time is no different. How the market reacts to the Fed decision on Tuesday could push us to new lows:
no changes
| Trend | Nasdaq | S&P 500 | Russell 2000 |
| Primary | Down | Down | Down |
| Intermediate | Down | Down | Down |
| Short-term | Lat | Down | Down |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
amazing that due to the vagaries of equal-weighted indexes, the biggest weightings in the XBD is now ETFC, AMP, AMTD and JEF.
JPM seems to be getting the kind of sweetheart deal only a well-heeled bank can get. It is buying BSC on the cheap and the Fed is taking on all the risk of BSC's crappy debt holdings (up to $30B). Where can I sign up for a piece of this risk-free action? :)
I do not understand (snicker). Aren't the markets efficient? how can a stock go from $30 to $2 w/o the markets even being open? Where is that dude with his "Random Walk" book to teach us about buy-and-hold and efficient markets?
Risk free action.....how about buying the euro (until Tricky does an about face) and the yen (until Fukui intervenes)
Even 50:1 can prepone retirement by...oh .....about 35 years.