DJ transportation average

March 18, 2008 at 1:41 am | Posted in economy USA | Leave a comment
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//admin.minyanville.com/assets/FCK_Aug2007/File/ss2.jpg” cannot be displayed, because it contains errors.Also, “Assets supported by leverage whose values are now unknown,” is indeed the right perspective because my guess is that is what happened to Bear Stearns (BSC) last week. To be sure, in many instances the issuers of CDOs (collateralized debt obligation), CLOs (collateralized loan obligations), CDS (credit default swaps), et al, have the liability that some of those vehicles can be “put back” to said issuer. Consequently, the problems at Carlyle Capital could have caused Carlyle to “put” some of its CLOs/CDOs back to the issuer, which potentially was Bear Stearns since it is one of the largest issuers of such vehicles. And that, ladies and gentlemen, may be why on Wednesday Bear’s president, Alan Schwartz, stated, “We don’t see any pressure on our liquidity, let alone a liquidity crisis,” yet on Friday had to be “bailed out” by none other than the Federal Reserve via JP Morgan (JPM).

For a number of quarters I have warned that before this financial fiasco was over there would likely be some “bodies floating.” Plainly, Bear Stearns is one such “body”! Yet, despite all of the negative news of the past few weeks, the D-J Transportation Average (DJTA) has refused to confirm the DJIA’s (DJIA) breakdown below its January 22nd closing low of 11971.19 with a similar breakdown by the Trannies below their respective January closing low, as can be seen in the attendant charts. Similarly, many of the other major market averages refuse to travel below their respective January closing and intraday lows.

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