Monday Meltdown again

After a 777 loss last Mon, Dow pulled another Mon sell-off only not quite as bad, down 370 taking it below 10K. Dow closed 400 points above the midday low of 9525 (but pulled back 100 from the peak about ½ hour prior to the close) as did other markets from an OVERSOLD position. However, problems remain. There were only 250 advancers on NYSE & NAZ dropped 83, again above midday lows.

The S&P 500 fell to 1047, bringing it close the the magical 1000 line. This comes from all the confusion in the credit markets. Key stories are printed below. One would be a lot to digest. But a string of one bad news story after another was too much to take for the markets. A particularly disturbing one was that European govs can not cooperate.

•Paulson Talks With Bernanke, Geithner, Market Players as World Stocks Fall
•Fuld Blames Lehman's Collapse on False Rumors, Old Rules, `Storm of Fear'
•Bank Writeoffs May Triple, Mortgage-Bond Premiums Narrow as Bailout Begins
•Bush Predicts Restoring Confidence in Credit Markets Will `Take a While'

European Governments Go Their Own Way on Crisis- AP

• Treasury Puts Out Guidelines for Bailout Managers- CNNMoney.com
• U.S. Calls for Unity as Crisis Wrecks Markets- Reuters
• Combat The Bear With 5 Post Bailout Strategies- ETFguide.com
• Fed to Provide as Much as $900B in Loans to Banks- AP

It's easy to see where money went in commodities (out of oil into gold). Keep in mind that the selling of oil is based on a global economic slowdown reducing demand for oil:

CLX08.NYM

Crude Oil Nov 08...

88.23

... 5.65 (6.0%)

GCV08.CMX

Gold Oct 08

...864.30

... 35.40 (4.3%)

Among all the carnage the S&P 500 FINANCIALS INDEX didn't do too badly, only down 10 to 244. The Alerian MLP index fell 24 (a daily record decline) to 190 (4 year low), but up from the intra day low of 180. The Dow Jones REIT dropped 8 to 211. The VIX, volatility index, rose 7 to 52, an undreamed of level just last week.

There was some good news. Lilly (LLY), an S&P 500 Dividend Aristocrat, down 2.89, is buying ImClone (IMCL) for 70 (stock up 1.83 to 66.89).

• Eli Lilly agrees to buy ImClone for more than $6B- AP

As painful as last Mon & this Mon were, they do not represent the dramatic sell-offs associated with selling climaxes (of course in these times, old rule books are being thrown out windows). Nothing indicates that the bleeding has stopped (i.e. regarding stock sales). Wild moves in stocks & volatility at record levels shows people are scared to invest. That emotion, or lack of emotion, will not go away quickly. More days of bleeding are ahead. This time can be used to line up stocks for purchase and personal target buying points. Good luck!