Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
James Brown : 9/15/2008 1:37:41 AM

FYI...
Major markets in Asia are actually closed on Monday for public holiday.

Affected markets are... Japanese, S. Korean, Chinese, and Hong Kong markets are closed for holiday...

James Brown : 9/15/2008 1:36:18 AM

News Alert!

Bank of America (BAC) is buying Merrill Lynch (MER) for $43-to-$50 Billion...

James Brown : 9/15/2008 1:37:11 AM

News Alert!

Lehman Brothers (LEH) has filed for Chapter 11 bankruptcy on late Sunday night....

Tab Gilles : 9/14/2008 11:08:46 PM

Banks roll out $70 billion loan program -- AP

A group of global banks and securities firms announced late Sunday a $70 billion loan program that financial companies can tap to help ease a credit shortage that threatens global financial markets.

The ten banks, which include JPMorgan Chase & Co. and Goldman Sachs Group Inc., said they were committing $7 billion each for the pool. The pool would act as a signal to the marketplace that banks, brokerages, and other financial companies can lean on the fund to take care of borrowing needs.

The banks said the program will be available to participating banks which can get a cash infusion up to a maximum of one-third of the total size of the pool. The size of the loan program might increase as "other banks are permitted to join."

All participating banks intend to use this facility beginning this week, the statement said.

The banks also include Bank of America Corp., Barclays PLC, Citigroup Inc., Credit Suisse Group, Deutsche Bank AG, Merrill Lynch & Co., Morgan Stanley and UBS.

The banks made the announcement to try to head off market disruptions after the possible failure of investment bank Lehman Brothers Holdings Inc. Lehman was expected to file for bankruptcy by Monday after succumbing to dwindling investor confidence due to losses from its real estate holdings.

Tab Gilles : 9/14/2008 10:35:28 PM

Press Releases

Federal Reserve: Link

SEC: Link

Merrill Lynch, the world's largest broker, agreed to be acquired by Bank of America for $29 a share, or $43.5 billion, after being pressured into a deal by federal regulators.

Tab Gilles : 9/14/2008 10:14:47 PM

Derivatives market trades on Sunday to cut Lehman risk

NEW YORK (Reuters) - Major players in the $455 trillion global derivatives market rushed Sunday to scale back exposure to a potential bankruptcy filing by investment bank Lehman Brothers in a rare emergency trading session.

Trading took place as U.S. regulators and bankers were making last-ditch efforts to prevent toxic assets from ailing Lehman Brothers spilling into global markets and rupturing investor faith in the international financial system. For details see

"This is an extremely, and I stress extremely, rare event. It also speaks to the more general notion that, in today's highly disrupted financial markets, the unthinkable is thinkable," said Mohamed El-Erian, the chief executive of Pimco, the world's biggest bond fund, based in Newport Beach, California.

The session opened at 2 p.m. New York time and was due to run until 4 p.m. (1800 to 2000 GMT), according to the International Swaps and Derivatives Association. ISDA later extended it for another two hours and some banks continued to offset their Lehman exposure even after the official session ended, according to a market source.

Trading involved credit, equity, rates, foreign exchange and commodity derivatives. ISDA estimates the OTC derivatives market excluding commodities has a value of $455 trillion.

Market sources said the special session was initiated by the Federal Reserve.

The aim is to reduce risk associated with a potential bankruptcy filing by Lehman Brothers Holdings Inc.

"Trades are contingent on a bankruptcy filing at or before 11:59 p.m. New York time Sunday (0359 GMT)," said the statement. "If there is no filing, the trades cease to exist."

Keene Little : 9/14/2008 10:10:44 PM

Monday's pivot table: Link . QCharts did it again and has now changed the symbol of the Russell 2000 emini futures but it won't work for some reason. This company (eSignal) is a real piece of work. I'm using the cash index for now until I can figure out what they've done. The other futures contracts now have data for the December contract.

The SPX 10-min chart that I showed at the end of the day Friday shows a parallel up-channel for price action since Thursday morning: Link . If it breaks the uptrend line, near 1248 at Monday's open, we'll know the bounce is probably complete. With equity futures down hard Sunday night (not happy about the lack of progress in buying out Lehman) it's looking like a foregone conclusion that we'll see a breakdown on Monday (S&P futures are down -36 at 10:00 PM, up 7 from its low).

I had thought on Friday that we might see a push somewhat higher and liked Fibs and trend lines near 1261 and then 1269 (maybe as high as 1273). Unless there's good news befor the market opens it's not looking so good for the bulls here. In addition to a Fib projection based on the move up from Thursday morning the SPX 60-min chart shows potential resistance in the same 1261 area by the downtrend line from May through the August 11th high: Link . This trend line is where price stopped on the September 8th bounce.

The key level for the bulls to achieve is 1285 as that would indicate we'll see a rally up to at least 1324 (two equal legs up in the bounce off July's low) and maybe even as high as 1360 to meet the downtrend line from October. But the buying has been relatively weak compared to the selling so don't hold your breath for that kind of move, shown in pink on the daily chart: Link . The higher-probability path at this point is the dark red which calls for some heavy selling right around the corner (and could kick off with a gap down Monday morning, as the EW count supports). But remember, it's the higher probability not certainty. Keep your risk management under control.

It's interesting to see where NYSE finished the day on Friday: Link . It stopped right at the intersection of the July low and the trend line along the lows since the end of July. Needless to say the bulls need to keep the buying going otherwise we'll see a bearish kiss goodbye here. Again, that's looking like a certainty Sunday evening but there's lots of dark left before daylight.

OI Technical Staff : 9/14/2008 9:59:59 PM

The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Tab Gilles : 9/14/2008 9:53:30 PM

Merrill Lynch, the world's largest broker, agreed to be acquired by Bank of America for $29 a share, or $43.5 billion, after being pressured into a deal by federal regulators. Link

Tab Gilles : 9/14/2008 9:46:21 PM

Federal Reserve:Press Release Link

Tab Gilles : 9/14/2008 9:38:35 PM

Alert: From The SEC on the Lehman Situation Link

Tab Gilles : 9/14/2008 7:29:50 PM

Lehman's future in doubt, banks seen unveiling plan to restore confidence in financial system Link

Merrill Lynch, Bank of America in talks about a combination, according to report Link

Tab Gilles : 9/14/2008 2:33:56 PM

Barclays pulls out of Lehman deal, talks continue Link

Tab Gilles : 9/14/2008 1:08:33 PM

Lehman Update

Lehman talks continue as Barclays emerges as buyer Link

Greenspan weighs in on Lehman Link

Market Monitor Archives