Game Theory on the Market

15 minutes to the close, the Dow Jones was up 250 points. At the close, it's down 74. What gives? Well, I said to myself, "todays close will tell us if there's any selling pressure left. If it collapses at the end, it will mean that the selling pressure's still there." A couple of weeks ago, the market would get flushed out every day at 3:00 pm. Last week, it was 3:30. This week, it's 4:50. This tells me that there's still a mountain of crap to flush out of the market. The sellers don't want to kill the rally, so they're waiting later and later in the day.

And a quick word on GM: bailout. It seems that GM will get government help in buying Chrysler in return for limits on job cuts. Rumor has it that the Treasury will buy $3 billion in preferreds from GM. That's almost market cap. Also, GMAC has applied for and gotten access to the Fed's commercial paper bailout funds. But they're not out of the woods yet. It depends on how they structure this thing, but if the bonds turn out to be safe, they should be worth $10 to $15.