Eery Calm

After the two wild days that began this week, today seems surreal. Maybe it's just the fog I woke up to this morning, but it seems appropriate. The big news is Lehman Brothers reporting losses a hair under expectations. Initially they got a boost, but they're already down. Also, they're lying through their teeth. If they thought they'd get a boost by just reporting a little better than consensus, they're wrong (well, technically not until the end of today). It's too obvious, and no one believes them any more. Now, supposedly they're going to sell everything off. They have buyers for everything. Really? What happened to all the buyers you had last week, and the week before that? And finally, what's left for the shareholders if you sell everything off?

And here's the quiet news: WaMu, which dropped 20% yesterday is down another 25% today, according too Bloomberg. Reuters is reporting that WaMu's CDS spreads are hitting records. Default expectations are at 45% for one year and 65% for five years. This kind of market is a self-fulfilling prophecy. I don't see how WaMu can survive this year. Is the FDIC prepared? No, of course not.

As far as my trades go, I'm not sure what to do here. I'm toying with the idea of buying some HTE or more PWE, due to natural gas being driven down by the hedgies. I'm also thinking of closing my oil short. I think too many traders expect the bottom to fall out, should the psychological $100 floor be breached. On the contrary, anyone with the firepower would be wise to defend the floor at all costs, given the number of long-term energy bulls out there. I would not be surprised if oil dropped below $100 intraday, but closed higher.

With the VIX jumping over 25 yesterday, I'm starting to think about taking some profits, but given the fundamental weaknesses in the global economy, I have to hold on for a bigger payoff. In other words, I need to see my shorts hit new lows, or the VIX jump back over 30, or both. So, most likely, I will just hang tight right now and wait.