Wash Post Declares "Death of American Capitalism"-10/10/08

1987 Style Crash-10/9/08

Fed, ECB, others Coordinated Rate Cuts-10/08/08

House Passes Bailout-10/3/08

"NAY" to Bailout-9/29/08

SEC Short-selling Ban & RTCII-9/19/08

Gasparino Day-9/18/08

AIG Bailout-9/16/08

Lehman Bankruptcy-9/15/08

Fannie & Freddie Bailout-9/8/08

A Couple of Cool Graphs

The US debt-to-GDP ratio has a lot further to run. The question is whether Obama will give the US economic problem the sense of "wartime" urgency (as FDR did). I suspect that he will be a gradualist, and the US economic will hit a second leg down by March.

If McCain is elected, then he will focus on fiscal matters. My guess is that he'll toss a few crumbs to people, but then he'll start cutting the budget. This will cause the economy to slide even further and faster.

Regardless of who is elected, whatever they do will be too little, too late and we will have another leg down by spring of 2009.

In the meanwhile, we remain on hedge fund death watch. I think that on scary HF blow up news, the market will be a buy. On rally days, the market will be a sell. There is heavy resistance between 1100-1200.

HOW BAD CAN VIX GET?

The VIX is at all time highs. How high can it get? Back in the 1930s it was close to 100. It can get pretty bad.

PAULSON BLUES

We are seeing a replay of the original Paulson Bailout trading. On 9/18, we see the leaks to Gasparino which took the S&P up from 1175 to 1212. The next day, we had an options expiration SQ, and the S&P opened up at 1287. From there, within 3 trading days, it closed down to 1187.

This is a new pattern. The BAILOUT REJECTION PATTERN. We are just making this stuff as we go along.

Unprecedented.

POST-HIGH INTENSITY DAYS

This is what happens after each HIGH INTENSITY days.

HIGH INTENSITY DAYS

Here are a series of recent HIGH INTENSITY days. Of course, they are all sell-offs to the downside. What is interesting is that most of the days feature bottoming at the close, except yesterday 10/6/08. I think that the bottom timing is beginning to morph.