Top Line: The stock market took a hit tonight as the financial meetings over the weekend were less than productive. The failure of Lehman seems to be at hand. The failure of us to keep a post seems sort of permanent. Please see the papers for full information of the events of the weekend. The US futures are down hard this evening following that news. With the market in the perfect position to fall hard, this seems right in line with our way of thinking. We need to remain at red alert for a good time to take some profits in our short positions and our main indicator to do this will be the VXO approaching and/or exceeding 50. It closed just under 30 on Friday so there is some distance to go but a big down opening on Monday morning will push that number up closer to 50. A last minute emergency rescue of Lehman may be worked out overnight because the government knows that a financial system crisis can induce massive fear in the markets. They don't want that but with all of the bombs going off the last few days, covering them all is a bit difficult. Merrill Lynch says it wants to be purchased by the Bank of America and AIG is trying to restructure. Lehman seems to be very close to liquidation. All of these things are going to be too much for one weekend's worth of work.
Be alert this week and protect yourself.