When Financials fail - Monday Sept 15th, 2008

Closing #'s:

DOW: -500

S&P: -54.5

NASDAQ: -65

RUS2K: -27

TSX/S&P: -438

VIX: +6.04

Internals:

Core Sector List: 15/1

NYSE TRIN: .09

NYSE AD: 2600

NYSE BREATH: 9/1

NASDAQ TRIN: 2.8

NASDAQ AD: 2000

NASDAQ BREATH: 20/1

ES E-Mini S&P Chart (click to enlarge):

Today on the Marketbeat:

An Epic time in history - When Financials Fail

Today was another day that will be remembered in the financial markets. Not only did it mark the end of yet another financial entity, it was the biggest one day drop on the exchanges in years. The Dow closed the day down 500Pt's, and the S&P down 50Pt's. These are huge losses on the exchanges. Could this be the "get worse before it gets better" or is it just getting worse?

 If remembered for nothing else in 2008, I believe that this year will be known for some of the biggest, strongest financial institutions, bowing out of this financial ballet. The first to leave us was the powerhouse Bear Sterns, bowing out earlier in the year while the housing/mortgage crisis was just setting a blaze. Many of us saw this coming and thought maybe the worst could be behind us as we moved into summer moving higher in the exchanges. However this was far from the case as we soon learned when other names started hitting the fan. First it was staples like Freedie Mac and Fannie Mae, and now Lehman Brothers files for Chapter 11. The truth may have taken some time to settle in our minds, but now we can firmly see that the problems facing the economy are widespread and far from over.

 Today was another wild rollercoaster, hold on to your hat day. After the market clawed its way up last week, it only took a couple sentences involving the words Chapter 11, and large financial entity to bring the market to its proverbial knees. We opened the day on the S&P around last Thursdays lows (approx 1211 on the /ES Minis), quickly using prior support as a solid ground to attempt to fill the gap, but once price action met up against the 200 Day Ma it quickly made its way back down towards S3 (1221) and chopped in and around S2 and S3 until the 2pm reversal period when it cracked the lows.

Internals were about as one sided as a fight between a gorilla and a cricket. On the heels of the largest drop on the S&P since '02, the internals essentially mirrored this, as there wasn't much confusion under the hood. The core sector list was a sea of red, following all the major indices being down +3%, closing 15/1 to the bears.  

Food 4 Thought to Use with Stocks:

Today's wild seas of red has been a steady occurrence this year in the markets. However, a drop of +3% on the major indices alongside the horrendous news coming from the financials, as more and more are filling for Chapter 11, this day becomes more than just another big drop, it becomes a sign of what is next to come. I'm not a psychic, and i will not claim to have the slightest idea of where we will be tomorrow or next month. The market is showing its hand and all we can do is digest the information and do our homework. Today these is a spot lite on the current market activity. Go to www.thinkorswim.com to sign up it begins at 5pm est. I will try to have the link for the achieved video.