S&P 500 FINANCIALS INDEX rose nicely on the news about the proposed bailout back approval, remaining in the sideways trading band it has been in for 10 weeks (with an upper limit of 302):
Value 276.60 ___ Change +7.06 ___ % Change +2.6%
Oil had a good day along with stocks for the same reasons, bailout hopes. The Dow Jones REIT Index was up 5 to 248 & the Alerian MLP Index was up 6 to 239 (probably following the up day for oil).
| CLX08.NYM | Crude Oil Nov 08 | ..108.02 | .. 2.29 (2.2%) |
The rescue package will be agreed to but the finally approval will probably have to wait until the last minute on Sun PM, prior to Asian markets opening. Both sides announced they had agreed in principle, it will be very embarrassing if they can not make it happen now after all that publicity. Optimism is running high that we may be near the end of the credit crisis. The idea is that things will settle down & business can get back to running as usual. I don't believe solving the problem is all that simple! After passage, probably in Mon trading, there will be a big pop, especially for financials. But then there will be a day 2 followed by day 3. Macro economic issues will keep coming plus nobody knows how much good the plan will do to solve massive financial problems in the system. Just one of those problems to be worked out is Washington Mutual (WM), largest S&L in the country, is up for sale. The stock dropped 25% today to 1.29. It's huge portfolio of mortgages is considered to be worth little, maybe the bailout package can bring life back to WM.
•U.S. Lawmakers Reach Agreement in Principle on $700 Billion Bailout Plan
I just had another article published at SeekingAlpha, this one on buying gold. The flight to safety concept is out of vogue this week, but there are always a few who would like to have some for diversification. Now it's easy because it can be done by buying stock.
http://seekingalpha.com/article/97160-buying-gold-what-is-high-and-what-is-low
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