Yesterday, I drew a terrifying but silly chart in the comments of one of yesterday's posts. It's silly because technicals trading on the TED is insane and you shouldn't do it; nobody does that there, it makes no sense. It's also silly because those lines are kinda crap, by technicals rules; they aren't really touching a lot of points, and should. But what it indicated if you applied those rules to the TED was TO THE MOON, ALICE! BANG-ZOOM!
This morning, this key spread - the rate banks charge each other for extremely-short-term loans - has spiked up to levels not seen since the 1987 stock market crash, which is to say to the goddamn moon, at 2.85. (Currently down a bit to 2.79, but that's within normal jitter.) That's over ten times the normal .25 carry rate. The banks now appear absolutely convinced someone big is about to die, and probably that several bigs are about to die.
I also was going along with the bounce theory driven by the financials today, and am obviously not seeing it at the moment. At all. In fact, this stinks of capitulation, as people are fleeing en masse into "safety" - Treasuries, Oil, Gold. (As I type, Dow -248.90, Nasdaq -57.57., S&P 500 -31.07, all very steep declines with gaps down in the open; gold and oil are up, and 35-day T-bills are only paying 0.17%, which is astoundingly low.) I am not calling a crash here - you simply cannot call a crash to the day and snapback rallies can materalise out of nowhere, particularly with an actively interventionist government being, well, actively interventionist - but I do feel obligated to point out that this is where you see crashes.
And I do think this is where people have decided that this is for reals. I think the Treasury non-action gave people a moment of fantasy, that it's actually all okay, but the AIG demi-nationalisation has slapped that right back out of them.
But I don't know; we'll just have to see. At the moment, the Dow is now down 267.87, NASDAQ down 60.91, S&P 500 down 32.44, and the graphs have just reset to lower resolution to handle the wider trading range down. Today will be interesting.