Death By A Thousand Cuts

by Larry Levin

The market was hammered again today, not by anything in particular, but by everything. Today's stew of news had a bearish flavor sending the Dow down -239.61 points and the S&P down -23.39. There was news of two more bank failures over the weekend, oil rallying, bank weakness, safe haven buying of bonds, etc, etc.

Over the weekend we learned that both First National Bank of Nevada and First Heritage Bank N.A. of California were seized by the FDIC, and then sold to Mutual of Omaha Bank. Investors were rattled since this news comes so soon on the heels of the failure of IndyMac Bancorp. This revelation led many to believe that many more bank failures are to come, so they sold bank stocks and plowed in government bonds.

But investor worries are misplaced, aren't they? After all, the omnipotent Senate did us all a favor by convening this past Saturday to pass the latest handout to the most undeserving among us: those that bought homes with money they didn't have. I believe this boondoggle has a current price tag of $300-billion. It will surely need amendments, extensions, and whatever else our elected officials can dream up, which will probably come to a final price somewhere near $700-billion.

An overnight attack on Nigerian oil installations boosted oil futures today, closing $1.47 higher. The country's main militant group, The Movement for the Emancipation of the Niger Delta, attacked two oil pipelines in southern Rivers State believed to be owned by a unit of Royal Dutch Shell PLC. Shell said a pipeline had been damaged in attacks and that some crude production had been shut down to prevent an oil spill. However, the rally was subdued do to further evidence that high gasoline prices are crushing demand for the flammable stuff.

How many times has Merrill Lynch said it doesn't need to raise more capital? I'm guessing it has been at least three times and yet they keep asking for more suckers to pony up more cash. Late today MER announced it is raising another $8.5-billion by selling common stock. Perhaps the news was leaked during the day - MER was hammered -11.59% lower today. After the announcement, it is only down an additional -1.36%.

How do you spell dilution? I spell it M-E-R.

Real Time Trading Signals*for

Trade Date: 7/28/08

E-Mini S&P Trades*
(before fees and commissions):

1) VA buy @ 9:45am at 1254.00 = +1.00 & -1.00

2) This makes the 3rd consecutive day of no fills - trending or not!

3) Algorithm trades (6)...combined total...-1.75


E-Mini Russell Trades*
(before fees and commissions):

1) No ER trades filled today.


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