Obama – No Blank Check Bailout.

Fed chair Bernanke and treasury Secretary Paulson have asked congress for a $700 billion dollar bailout. The or else behind this bailout seems to be the belief that the world’s banking system is freezing and that no bank will loan another bank because they do not know the amount of toxic debt that each bank has. This will lead to a total financial meltdown. Obama offered qualified support.

Obama called the $700 billion "a staggering price" He made two major statements

"the must be no blank check when American’s are on the line for this much money"

"Taxpayer shouldn’t be spending a dime to reward CEO’s on Wall Street while they are going out the door."

Nancy Pelosi – "We will simply not hand over a blank check to Wall Street."

Link to story here and link here

McCain’s Initial Response

McCain has called for the firing of SEC Chair Harvey Cox. For this has been strongly criticized by conservatives like the editorial board of the right wing WSJ and by conservative icon George Will who called the action "decidedly unpresidential" Countries all across the world are following first England and then Cox in banning short selling.

John McCain started this week which has exposed the the worst economic crisis since the Great Depression by saying "fundamentals of this economy are strong."

ABC’s Sam ee – McCain’s "erratic response on the economy again raises questions about his age." (see yesterday’s Updates)

McCain has now calmed down and both candidates called for "oversight " this AM.

Story Link from ABC here

Major Message to All investors

The Dow under Democrat Bill Clinton (8 years) flourished from 3000 to 11,000. Under Republican George Bush (8 years) the Dow flatlined at 11,000 and will end with the most exorbitant financial bailout in the planet’s history. Who voted with Bush 90% of the time and was a champion of deregulating (major cause behind the meltdown) for a quarter century – Republican John McCain. See Big Charts for Dow over last 30 years.

Send the above message to all your friends who are interested in making financial gains

Many thanks to all of you who have sent in emails. The above statement was the end realization of a series of emails over the weekend

Stocks

Index % Change Volume

Dow +3.35% down
NASDQ +3.40% flat
S&P500 +4.03% down
Russell2000 +4.15% –

Morgan Stanley and Goldman Sachs Become Commercial Banks.

The big 5 unregulated investment US investment banks are now all gone. For story on MS and GS becoming bank holding companies

Japanese bank to buy 10 to 20% of MS – Just announced on CNBC.

US Markets

Second huge rally day in a row. Big Volume. Technicals mean very little because fundamentals (news) are in control.

The fact that short selling seems to be shutting down across the world is very bullish for stocks. Will explain more when there is time.

Chart of the benchmark S&P 500

Chart of the Russell 2000

Chart of the NASDQ

Chart of the Dow

OIL no longer RULES

Oil prices are now followers instead of leaders. If stocks go up – oil prices will follow. If they go down so will oil. Oil prices close up at $102.75 Friday and pre market trading at 8:30 AM is $106.54

Chart of oil (WTIC)

The VIX

Still the best indicator of market bottoms in bear markets.

Chart of VIX

Short Term Outlook – Those of you who had the guts to buy while there was blood in the streets – Bravo. The elimination of short selling for over 800 US companies is very bullish for stocks. This is like

AS ALWAYS DO YOUR RESEARCH BEFORE INVESTING

Long Term Outlook CAUTIOUSLY BEARISH

Technicals – New Rally – Will it Last?
Fundamentals – financial mortgage transparency problem is far far far far far far far far far bigger than anyone thought.
(Caution – this “Outlook” is based on US equities and while US markets greatly influence other markets it is not necessarily the outlook for recommended sectors.)

People feel like we are in a recession, the actual strict definition – 2 quarters of negative GDP growth has not occurred. The financial crisis is overwhelming bad news.

Asset Allocation/Recommended Sectors (long term)

* 85% to 100% Cash

* 10% US Index Funds
UWM (2x what Russell 2000 does) & QLD (2X what the NASDQ does)

*5% Emerging Markets
EEM (emerging markets)

Chief Strategy – Buy the dips of trending sector You have to have a strong tolerance for risk to jump in now.
Changes to Bottom Line Section Bolded .

As Always Do Your Own Research Before Investing

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