I have to be brief today, so I'll get right to it.
The financial rescue package failed to get the minimum number of votes to pass after Republicans in the said speaker Nancy Pelosi made a partisan speech near the end of a debate. At the end of the day lawmakers decided her insult should be followed by injury. As a result the major market averages suffered their biggest decline of the year;
DJIA: 10,365.45, down 777.68
S&P 500: 1,106.42, down 106.59
Nasdaq Composite: 1983.73, down 199.61
The Jewish holiday begins tomorrow, and extends through Wednesday for orthodox Jews. On Thursday, I am expecting the congress to begin debating on the rescue package again, and vote on a revised version of the bill this week.
As it stands, it looks like the markets have and will reach the downside targets that we had identified all along. The the S&P 500 has broke below our target of 1175, the NASDAQ broke the 2000 level today, and now it looks as if the DJIA will trade down to 10000 or lower.
In stock news, Wachovia (WB) laid a bombshell on the markets by selling their banking division to CitiGroup for $1.00. Wachovia will remain in business as a publicly traded company. The new Wachovia will be known as Wachovia Securities, the third largest brokerage firm in America. The valuable assets at the new company will be A.G. Edwards, and Evergreen Asset Management.
The VIX index spiked to over 48 which can be described as very pessimistic, and close to the widely touted capitulation day. Since I believe Congress will pass some sort of rescue package for the financial sector, we may be at or near the lows for this sell-off.
Today, would have been a great day to enter the newest additions to the DG ETF and sector fund portfolios. Crude oil finished down more than $10 per barrel on concerns that economy will dry up and demand will fall.
In the last half hour of trading, we added the PowerShares DB Energy fund (DBE) at $37.85, and we will have to wait until tomorrow to get the closing price on the Fidelity Select Natural Resources (FNARX) fund.
Buckle you seat belts, the ride isn't over yet!
