Hmmm...interesting day. The market opened higher and continued to make new highs until around 12.30 EST. From there all of the prior gains were erased and we finally lost 17 points in the close. (0.21 %)
The perhaps biggest news of the day was the bankruptcy filing of Chrysler. A sub group of creditors did not agree to the concessions put upon them and the whole restructuring deal so carefully crafted disintegrated. Government officials have been quoted as trying to achieve a surgical bankruptcy. Interesting concept...unfortunately though...unless some party gives in (and of course there is a good chance for it) it will not work .
Due process in front of a judge will take time and anybody who thinks that a bankruptcy of this size can be done in 45 to 60 days might be in for a surprise. Let's hope that it will work but I am doubtful.
The other news of the day, and more meaningful for the rest of us who are not directly impacted by the Chrysler Bankruptcy, was the weekly jobless claim report. The number came in at 631 thsd versus a consensus forecast of 640 thsd.
The lower than expected number together with a slight downward revision for the prior week makes it seem that new jobless claims might have plateaued and are starting to improve for the 1st time.
Today's failure to hold onto earlier gains and go negative suggests that we might be heading lower at least for the time being. The 7 week bull run looked shaky before but after today it certainly looks like it seems to be running out of steam for at least a little while.
I Expect the Dow to head towards the 7750 level at the very minimum now. A close above 8300 would change my opinion.
As said yesterday...it is time to buy some puts.
Until tomorrow
Steve Benger
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