Automakers Will Go Back to Capitol Hill For Money

The market action yesterday was pathetic. I am usually not so blunt, but there is no other way to sugar coat it. Most people want to know "what happened"? But there was no real smoking gun. It was a pure buyers strike.

Stocks plummeted on relatively low volume. And if you don't believe me about the buyers strike, take a look at the ARMS Index (a measure of buying vs. selling pressure), which hit a near record 9.89 in the closing minutes.

The market is bouncing this morning, but when you have such a huge one-day plunge, the market would have to stage quite a rally for the rest of the month just to erase yesterday's damage. Frustrating.

Several stocks are higher this morning after reporting weak earnings news, which is a good sign. You want to see stocks react positively to bad news. Sears Holdings (SHLD) reported a big loss, but the stock is higher. Staples (SPLS) beat estimates slightly, and Beazer Homes (BZH) reported a massive loss. And GE said EPS would come in at the low end of guidance. It also said it would maintain its $1.24 dividend in 2009, which equates to nearly an 8.0% yield. The stock is up +9.5% on the news, which is helping the broader market.

The automakers will go back before lawmakers today to outline how they would use the potential $25 billion loan. They will also release November sales results later today. I fear the drops will be horrific.

California declared a fiscal state of emergency to deal with its budget crisis, which enables them to act in 45 days, a shorter time period that under normal circumstances. The state budget is a mess, and needs to be seriously addressed.

Asian markets were lower across the board overnight, despite another rate cut in Australia. The dollar is lower this morning vs. the Euro. Oil is slightly higher, but still below $50 after yesterday's sharp plunge.

The 10-year yield is up a bit to 2.74%, an amazing low level that has not been seen since 1955. The VIX is falling -7% to 63.72, back above its 50-day average that we hoped would offer stiffer resistance.