No one can anticipate that the auto bailout plan, will die in Senate, although already been passed in Congress. And now, the White House step in to prevent a collapse on auto sector. Until the time I wrote this post, the White House still haven't come out any plan on the replacement bailout plan, but it just promise it will do so, the bailout.
And on 2008/12/12, SPY experienced a perfect swing, which it up nearly 5% if compare to session low, making the chart become more unpredictable. If you look at the chart, SPY still haven't break the major trend line, but it formed an uptrend line from 2008/11/20 low. But the MACD showed positive divergence, so it would more likely to be uptrend. But all still depend on the unpredicted news, such as GS, MS report on next week, and the most importantly, the auto bailout plan.
For my personal view, I think White House should not save the auto maker. But it may arrange it into more manageable bankrupt plan, or merge them together, to compete with Germany and Japan automaker. Certainly, everybody know, US automaker are not competitive enough, it is not a secret. And, with lending 14 billion to them, to pay the dealer, won't solve anything. Everybody know it, but they are trying to avoid a massive collapse on auto.
There are still a lot of uncertainty on financial sector. And the first 350 billion of TARP, already dry up after save the giant bank, Citigroup. If they still lend the money to automaker, when another round of financial institution problem arise, they will not able to act. It will be unlikely the second phase of 350 billion will be pass for current Bush administration.
We shall see, in the next few day.
