Recap

A very weak open followed by a bounce off support levels and a strong rebound . The Dow, S&P and Nasdaq all closed up big on good volume. Semis, utilities, oil and housing were the big winners today. My positions were all in the green apart from LVS and FFIV. Todays trading makes me believe that the big money is already aware of the FOMC statement that is going to be released tomorrow. The question is are they propping up this market so they can sell or are they loading up for a bull ride. With the level of volatility, who knows what is going to happen next.

There is a looming credit crunch on the horizon and the Bear Stearn hedge fund situation is only the beginning. Once the values of the CDOs are reassessed and in all probability valued as junk, margin calls will be forthcoming and things could get uglier. Where there is smoke, there is also fire. The Bear Stearns hedge fund saga will continue to unfold bringing grave consequences to the capital markets.