Tuesday: Bank of America, Wachovia

BAD NEWS TRADE OPPORTUNITY:

On Tuesday Bank of America and Wachovia are going to present their 4th quarter results.

This is going to be really really really bad.

They are forced to disclose their losses by the November 15 FASB accounting regulations, encouraged to take as much as possible upfront.

As I wrote about here:
http://www.lewrockwell.com/orig8/lysglimt1.html

They have massive losses, massive losses, and they have to come out in the open. I would not be surprised if they aim to take it all in one sweep and announce unprecedented losses on Tuesday.

It is enough if just one of them report extreme losses for the entire day to be in the red.

Tuesday is January 22. The FED meeting is one week later on Tuesday January 29.
I have now come to believe that Ben Bernanke will NOT come out with a surprise out of schedule rate cut before the January 29 meeting, doing so would look desperate.
He can go out at 2 PM Eastern (when the rate cuts are usually reported) on Tuesday 29th, that will seem more in control. He will wait.

I believe therefore we will see a very red week ahead. Perhaps panic selling will occur even, late Tuesday or Wednesday.

Tomorrow Monday I will be looking in Europe (Europe is open) for interesting put options that do not take this picture into regard.

Buying them Monday and selling them Tuesday afternoon or Wednesday morning seems like an interesting bet.

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