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Tuesday, February 26, 2008

A Pop Above Resistance

Fun times. Late in the afternoon S&P saved MBIA from certain death. Ambac was not so lucky.

In classic fashion, the first headline to scroll across the new terminals was the reduction in rating of XL Capital, a smaller and less important bond insurer. Traders hit equities short with size, only to recoil in horror on the very next headline. The removal of MBIA from review trumps all. With ninja-like reflexes traders reversed their equity positions and cleared resistance around the 1367 area.

Equities are now positioned to challenge the 1396 area. Failure to hold the 1367 and 1371 area would result in a drift back down into the recent trading range.

MBIA Removed From Review at S&P, Ambac May Be Cut (Update4): “MBIA Inc., battling to stave off the crippling loss of its AAA credit rating, soared in New York Stock Exchange trading after Standard & Poor's said no downgrade of the bond insurer is imminent.

The insurer remains on negative outlook, meaning that any ratings move may be lower, though not any time soon, New York- based S&P said today in a statement. Ambac Financial Group Inc., which ranks second to MBIA among bond insurers, is being given more time to avoid a downgrade pending the outcome of company's plans to raise new capital, S&P said.”

Related Headlines:
MBIA Will Halt Asset-Backed Business, Split Units (Update3)
U.S. Home Foreclosures Jump 90% as Mortgages Reset (Update2)

Related Posts:
Bulls: Nothing But Failure