600 point swing, anyone else smell a rat?

[EvilEngineer]

I find it interesting that today the market went from -300 to +300... and the biggest leader was the financial markets (i.e. banks), in what is literally the worst year in history for them. So much so ... that I smell a big rat trying to prop up the market. Anyone want to help dig to see what went on today?

 

[proximity]

Probably more inflation to bail out the rich.

Same thing that always happens.

 

[ihsv]

Plunge Protection Team to the rescue!!!

 

[LibertyBrews]

Yes, something sure smells fishy.

 

[Eponym_mi]

No, its a dead cat.

 

[AceNZ]

Between the already announced 75 basis point rate cut and the now-expected additional 75 basis point cut before the end of the month, the rat you smell is called inflation. What you're seeing here is a classic case of how inflation transfers wealth from America's poor and middle class to the wealthy. And yes, it definitely stinks.

Funny how so many politicians get up in arms about tax cuts for the rich, and then don't blink an eye when the money supply is inflated.

 

[Greg in VA]

No, its a dead cat.

Possibly a dead cat bounce. I suspect that the early drop was a sell off by over leveraged hedge funds, someone who has a pretty good feel for economics has this same opinion

http://globaleconomicanalysis.blogspot.com/
passage below

Leverage Continues To Unwind

Market action now suggests leveraged hedge funds are selling what they can (oil stocks like Exxon Mobil (XOM) and tech stocks), not what they want (junk mortgage backed securities). The latter simply has no bid. Recent action smacks of margin call selling or a derivative blowup somewhere.

A Tipping Point For Tech was reached and latecomers hiding out in Apple (AAPL), Research In Motion (RIMM), Cisco (CSCO), Amazon (AMZN), or Motorola (MOT) have been punished mercilessly. Tech is now catching up to financials on the downside.

 

[Greg in VA]

The real stunner those is AMBAC up 75%, when in fact this should be a dead man walking stock, hopefully a bunch of bully-boy speculators get hammered tomorrow. AMBAC is rumored to have it's AAA credit rating in jeoporday which would be a death sentece for a bond insurer.

 

[theseus51]

Well, I mean there is a point when the markets will rally. After going down 20%, there will be a bounce. Investment graphs aren't straight lines up or down, they're jagged, reflecting the day to day spikes and drops, so I wouldn't be so quick to think there's any kind of manipulation. Long term, equity will flow into good investments, and out of bad ones, but day to day, anything can happen.

 

[EvilEngineer]

The real stunner those is AMBAC up 75%, when in fact this should be a dead man walking stock, hopefully a bunch of bully-boy speculators get hammered tomorrow. AMBAC is rumored to have it's AAA credit rating in jeoporday which would be a death sentece for a bond insurer.

Probably foreign investment today helped prop this up.

 

[webaform]

The real stunner those is AMBAC up 75%, when in fact this should be a dead man walking stock, hopefully a bunch of bully-boy speculators get hammered tomorrow. AMBAC is rumored to have it's AAA credit rating in jeoporday which would be a death sentece for a bond insurer.

http://finance.yahoo.com/q/ks?s=ABK

Check out the shorts. Could it be a classic short squeeze. Short's could be getting murdered as they buy and cover their short.

Shares Outstanding5: 101.55M
Float: 99.90M
% Held by Insiders1: 0.18%
% Held by Institutions1: 123.20%
Shares Short (as of 26-Dec-07)3: 34.71M
Short Ratio (as of 26-Dec-07)3: 4
Short % of Float (as of 26-Dec-07)3: 34.60%
Shares Short (prior month)3: 30.12M

 

[jclay2]

I would say that the 600 point swing was for 2 reasons.

1. People are still very unsure about the market at this moment and a 600 point swing sure shows it.

2. There was talk of a government bailout of the bond insurers by the government which would be a very nice plus for the banks as, they would likely not have to take as many write downs.

 

[bomybomy]

Yeah, its crazy. I work w/ bonds all day long, and this morning was SWEET...then all the sudden, they dropped like a rock in like 30 minutes.

I do believe it was the "plunge protection team"....

 

[AceNZ]

The real stunner those is AMBAC up 75%, when in fact this should be a dead man walking stock, hopefully a bunch of bully-boy speculators get hammered tomorrow. AMBAC is rumored to have it's AAA credit rating in jeoporday which would be a death sentece for a bond insurer.

Ambac's credit rating was already cut to AA last week. That's what triggered the whole melt-down.

 

[davver]

Financials led in the last hour. Probably some short covering and rumors going on. Will have to see how the international markets hold up tommorrow. The US has diverged from the rest of the world 8% in the last two days.

 

[Greg in VA]

Ambac's credit rating was already cut to AA last week. That's what triggered the whole melt-down.

I was not aware of that, I briefly recall reading that one of the credit agencies was considering a downgrade.

 

[HOLLYWOOD]

FED is GOING to drop another 50 basis points next week...

 

[billyjoeallen]

here's what happened:

1.The Fed slashed a key intrest rate in an emergency meeting.

2. The money supply expanded which weekened the demand

3. The dollar dropped sharply against foreign currencies.

4. U.S. stocks became cheaper to foreign investers, who scooped up the bargains.

5. Another big chunk of America has been sold off to foreigners.

6. Your savings is now worth bupkis.

not exactly a cause for celebration is it?

 

[Brian4Liberty]

Anyone notice the interesting trend of gold sold (gold drops a little), followed closely by DOW purchases (DOW goes up). It happened several times in the last hour of trading.

The Plunge Protection Team uses many tools...

 

[Greg in VA]

Anyone notice the interesting trend of gold sold (gold drops a little), followed closely by DOW purchases (DOW goes up). It happened several times in the last hour of trading.

The Plunge Protection Team uses many tools...

I think the more likely scenario is overleveraged hedge funds being forced to sell off assets to make margin calls.