Weekly Commentary through September 12th, 2008

Volatility has been much higher than normal.  For example, the S&P 500 index rose or fell by more than 2% on five of the nine trading days so far this month.  There were only six such days during the last 4½-year bull run.

Yet, for all that violent flip-flopping and massive gaps in both directions, the stock market ended last week essentially flat.

We are back near the lows for the year.  Bears had a great opportunity to plunge through important psychological levels. Everything turned red for the ride down; and then the market reversed again. Part of me wonders whether short-sellers didn't press their luck because they "fear" another Sunday bail-out (in some form or fashion).

The big news this week was about the fall of Lehman.  Here is a simple chart showing what happened to their stock this year.

080912 LEH ChartAs I write this, it looks like Lehman is filing for bankruptcy and that Merrill Lynch is getting sold to Bank of America.  Futures are down.

However, a big, quick, move down – here – might be the best thing to hope for if you are bull.

Here are a few of the posts I found interesting this week:

And, a little bit extra:

  • Sweet Dreams in Hard Times Add to Lottery Sales (NYTimes)
  • Niederhoffer's Ten Principles of Cricket and Market Power (Daily Speculations)
  • Wisconsin man eats 23,000 Big Macs since 1972 (Chicago Tribune)
  • Lehman Replaces Palin as Wikipedia Plaything (Infectious Greed 1 and 2)
  • McCain leading Obama in prediction markets and polls (Kudlow, RealClearPolitics)
  • Retailers Using Software to Increase Sales and "motivate" employees (WSJ)
  • Has the large Hadron Collider destroyed the world yet? (Click)
  • Biologists on the verge of creating a new form of "life" (Wired)
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