After reviewing some of the key technical and sentiment indicators over the weekend, I had concluded that we had reached a point where it is quite possible for stocks to stage a rally over the coming days and weeks that may get us back above 13,600 on the Dow Industrials and 1500 for the S&P 500. Of course, this would be contingent on a high-profile blow-up not occurring over this span and it would also be nothing more than a failed short-covering variety. Its a given that we will hardly go a day for some time now that a hedge fund here or a mortgage lender there won't a announce a freeze/failure/bankruptcy, etc. But today's lackluster attempt to rally in light of fairly robust bearishness (Investor's Intelligence Survey) has to embolden the bears. And again, the signs left wafting over today's action feels ominous. Goldman Sachs (GS) took a page from Bear Stearns' (BSC) playbook and chose to avoid mark-to-market for securities held in two of its quant funds that had suffered massive losses just since the beginning of August. The firm reportedly pumped $2-billion of shareholder capital into its sucking funds alongside another $1-billion that included Hank Greenberg, someone else whose wealth is intimately dependent on the current structure of the world's financial system. Also, Conventree Inc., a Canadian financial services firm, was rebuffed when it went to market to sell asset-backed commercial paper making it the first company I know of to actually delay payment on asset-backed CP. Adding to the angst was word of yet another submerging subprime operator, Aegis Mortgage, which reportedly ranked among the top thirty mortgage lenders in the U.S. And for you "contained" fans out there, Aegis is also 80-percent owned by Cerberus Capital Management. Cerberus is the private equity firm headed by former U.S. Treasury Secretary, John Snow, which recently closed on the massive Chrysler deal. By every conceivable measure, that is a losing deal already just two weeks old.
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