More Bailout Talk

by Larry Levin

As the bailout talks continue, the heretofore free-market bulls have turned charlatan: they now cheer massive governmental intervention now matter the cost down the road. It was said that today's large rally was due to Congress's guaranteed approval of the automaker bailout some time this week. In addition, President-elect Obama said he will spend money like FDR as soon as he gets into office.

Not all of today's news was as great as going trillions of dollars further into debt. Consider some of today's other news:

1. Tribune Co., owner of the Los Angeles Times, Chicago Tribune (among others), the Chicago Cubs, and Wrigley Field filed for bankruptcy protection today.

2. Dow Chemical Co. announced today that it will slash 5,000 jobs and shutter 20 plants to rein in costs.

3. 3M Co. is cutting 1,800 jobs in the fourth quarter and ordering some workers to take vacation or unpaid time off for the last two weeks of the year.

4. OPEC's president suggested the group could surprise investors with a hefty production cut later this month.

5. Texas Instruments Inc. drastically slashed its earnings and revenue outlook for the fourth quarter in yet another sign of a slowing market for technology.

6. National Semiconductor said it expects sales in the current quarter to drop 30% on a sequential basis, and gross margins to decline as it plans to significantly lower its manufacturing activity.

7. FedEx cut its full-year profit outlook as demand for its services has weakened along with the global economic slowdown.

8. Level 3 Communications announced it will slash 8% of its workforce.

9. New owner of Budweiser to cut 6% of its workforce in USA .

10. Mortgage modifications don't work. Data today shows that 53% of all mortgage modifications made in the 1st quarter have re-defaulted.

It looks like we're going to need a lot more big money bailout talk to keep this rally going.


Previous Day's Trading Room Results:

Trade Date: 12/8/08

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

1) Engf sell @ 11:30am at 902.50 = -2.00 (1 lot)

2) FT buy @ 1:35pm at 904.50 = +2.00 (1 lot)

3) Algorithm positions (7)...combined daily total...+0.25

ZB (30 Year Bond) Trades*
(before fees and commissions):


1) No trades today.



Sign up as an AvidTrader Member to receive "The Technician" Value Area's each day. The market then has an 80% chance of filling the Value Area. Many traders familiar with the Value Area and the techniques that go along with it use it to help them decide what trades to do each day. Join and see how this technique can help you trade more successfully!