"The market has absolutely no idea what's going on,"

[marmar]

from AP via HuffPost:



Stocks Mixed After Bear Stearns Deal
MADLEN READ | March 17, 2008 04:54 PM EST |

NEW YORK — Wall Street ended a temperamental session widely mixed Monday after investors grappled with JPMorgan Chase & Co.'s government-backed buyout of the stricken investment bank Bear Stearns Cos.

The Dow Jones industrials recovered from an initial drop of nearly 200 points to finish up about 21 points. The broader Standard & Poor's 500 and Nasdaq composite indexes ended lower as investors bailed out of investment banks and small-cap stocks and fled instead to large companies apt to be reliable during a weak economy.

"You move to the defensive names in times of market uncertainty _ safer, consumer names," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.

The buyout of Bear Stearns was certainly more appealing than the alternative: letting the investment bank collapse and causing huge losses for anyone linked to it. And some unprecedented moves by the Federal Reserve gave investors a bit of solace on what many predicted would be a day of precipitous losses in the stock market.

Besides supporting the buyout, the Fed lowered the rate it charges to loan directly to banks by a quarter-point on Sunday night _ two days before its scheduled meeting Tuesday. The central bank also set up a lending option for firms, including many non-bank financial services firms, to secure short-term loans for a broad range of collateral.

The Fed appears to be pledging to do everything in its power to keep the credit crisis from decimating the financial industry and the economy. Policy makers at the central bank are expected to reduce the target fed funds rate _ the rate banks charge each other for overnight loans _ by at least a half-point on Tuesday, and perhaps even a full point.

But the market remained extremely volatile. The sale of Bear Stearns _ at a minuscule $2.21 a share as of Monday's close, or a total of $260.5 million _ stirred fear among investors worldwide about other banks' exposure to the troubled credit markets. ......(more)

The complete piece is at: http://www.huffingtonpost.com/2008/03/17/stocks-mixed-after-bear-s_n_91859.html

[selador]

1. volatility

is a traders dream, but often leaves investors scratchin' their heads.

i do both. :)

the key is to have a plan, to employ risk management, money management, diversification and to stick with it.

i can't tell you how many people who thought it was the end of the world in 1987.

that turned out, in retrospect to be a PHENOMENAL buying opp.

dollar cost averaging even through the great depression (and 1929) was still a positive expectancy strategy.

the market is often referred to anthropomorphically. but in reality all the market IS, is the aggreagation of ALL traders trader decisions. trader decisions are manifested through order flow.

there are two sides to every trade

as a trader, this is the best market i have ever seen - incredible.

but for an investor you need to step back and look at the bigger picture