Stock Market Update -Sep 21st

Wow! What a week -DOW down 500, down 450, up 400, up 400 again. The financial markets are in turmoil. The Lehman bankruptcy, the government takeover of AIG with an $85 billion bailout, talk of Morgan Stanley and Goldman Sachs scrambling for survival options, Money Market Fund losses, and a massive $700 billion government bailout plan to be worked out over the weekend is keeping the market on edge. The Fed also made available an additional $180 billion to overseas banks.


'Short' sales were banned on most banks & brokers this week to stop their stock prices from going down! You would think that bank & broker shares would take off, and they did overnight, but then they all sold off on Friday -hmmm. So much for the 'shorts' causing the shares to fall -no more shorting allowed now, but they still fall. The same thing happened before with Fannie & Freddie. In spite of a ban on short sales, their stock prices still went down and the government eventually had to take them over (maybe it wasn't short selling causing the shares to drop after all, but rather something more fundamental -like being bankrupt!)

Also of note, AIG was kicked out of the DOW and replaced by Kraft Foods (K), another bank shutdown was announced on Friday, and investors are now also concerned about the safety of Money Market Funds. Lastly, Russia closed their markets to prevent them from dropping further! In the midst of all the turmoil, Gold rose over $150, along with most of the gold and silver stocks.

Next week we should get a resolution from Congress on the $700 billion bailout plan (save the bankers, let the homeowners fend for themselves)! Where will all this money come from -well, the government just prints some more! Part of the bailout plan includes raising the debt ceiling to $11.3B (see the debt clock at the top left side of this post). Seems like we keep having to raise our credit limit every year. It should be an interesting week!

BTW, in spite of all the turmoil, last week was my best trading week, thanks to the volatility and the run up in Gold. Professional traders can be profitable in any market...

Financial Crisis Enters New Phase
Stunning Fall for Main Street’s Brokerage Firm
U.S. stock indexes plummet as Lehman goes under
Government announces $85 billion loan to save AIG
U.S. Drafts Sweeping Plan to Fight Crisis
Citing Grave Financial Threats, Officials Ready Massive Rescue
Rescue plan seeks $700B to buy bad mortgages
Central banks flood credit markets with liquidity
Why did the Fed provide $180B to overseas banks?

Money market breaks the buck, freezes redemptions
Money funds see record $90 billion one-day drop
Rattled Russia orders markets to stay closed
FDIC Won't Run Out of Money, But WaMu May Be Toast
The worst is yet to come
How Financial Madness Overtook Wall Street
Gold posts record gain
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.