WED. SEP. 24- Breaking The Buck

Last week, among the notable finance firsts was one thought unfathomable. One of the largest money market funds- The Primary Fund managed by The Reserve suffered a severe redemption of its monies by panicked investors after it was discovered that the Primary Fund actually owned a swath of Lehman bonds. Because of the massive withdrawals from these concerned folks, the net asset value of the fund fell under $1 to approximately 97 cents in a rare instance of what is called “breaking the buck” in the industry. And if you think this doesn’t affect you, well, think again. How many of you own IRA’s, for instance, in which you are not fully invested? Well, much of that money is swept either into a company fund (i.e. a Fidelity money market fund) or into other funds…well guess what, rather than drawing interest on that money, suddenly your hard-earned dough was in danger of evaporating. This caused a mini-panic within the industry and caused the assets of an entity such as The Primary Fund to decrease from $63 billion to $23 billion in two days. This is one facet of the grand government plan; namely, Uncle Sam wants to be rich Great-Uncle Sam in assuring us that our money is safe. In turn, this led stocks like State Street (STT) to trade down to as low as 29 on Thursday before literally doubling since that time. We devote this space to this topic because it is a facet that must be watched over the next few weeks. The credit markets are still in lockdown mode and if people search to see if some money market funds are safer than others, a stampede of outflows could occur which would lead to more panic on Wall Street…and for us day traders, it is yet one more travail to be mindful of intra-day as we keep our eyes out for any added dangers in this risky environment.

Overnight, markets in Asia were generally higher while prices in Europe are near unchanged. Today is one of those dichotomy days discussed in the blog a couple of weeks ago; there is a vote of confidence because of GS, but how does that help everything that is bad? So, the market will likely try to sell off a bit- particularly from up well over 100 on the Dow on the futures which is where they are as of this writing…it will be very choppy all day in all likelihood at a minimum with a decided direction for the bulk of the day likely made by 10AM (until/unless Bernake says something unusual at his 2:30PM appearance).

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified



Good-

SIL- way up yesterday on substantiated rumors; buy on an A-B-A2 or preferably, a short thru unch if it opens higher

MS,GS- particularly strong yesterday into the close; notable…then after the close, Buffett announced his GS investment...looking for A-B-A2 to downside preferably before 8AM ET; since these are not locatable, looking for buy on SKF preferably at 100 or less for quick pop before 8AM ET.

AKNS, SPWR, FSLR- tax credit extended last night for solar companies; should eb good for solar stocks today

SQNM- positive drug news- looking for A-B-A2 of some sort preferably to upside but if news is digested early on, it will likely sell off very early in morning

COF- reiterated guidance and issued shares; usually, share issuance is bad but if tape is strong, may rally as a sign that the company is shoring up capital


Bad-

DTG- in danger of violating waiver covenant; short thru yesterday’s 2.90 low if it opens higher

AGM- continues weak; looking to short thru 6.50

ENER- horribly weak yesterday; would like an A-B-A2 bounce if oil rallies

ZION- high-quality bank stock; would like A-B-A2 to upside off of open

X/NUE- steels among other materials weak; due for a bounce of some sort

CB,PFG- weak insurance stocks; if market rallies, looking for A-B-A2 to upside

PPC- weak; looking to short thru yesterday’s low particularly in weak market

Earnings-

None before open; here are after-hours:
WED SEP 24 AFT

BBBY .46/1.86B .45/1.89B 1.83/7.44B 2.06/8.02B

CPRT .46/205M .47/205M 1.74/783M 2.06/887M

NKE .92/5.19B .80/4.75B 3.90/20.30B 4.45/22.02B
PAYX .41/541M .41/544M 1.64/2.22B 1.85/2.44B



Good luck today.

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