To my and many other traders surprise the house of congress denied the passage of the $700b bailout plan and caused mania today in the stock market. The Dow Jones index fell 400 points in a matter of 10 minutes after the bailout bill was slammed by 2/3 of the congressional board. This is the largest single day decline in the Dow Jones index in history. Seems like were making new records every week……. Here’s what Bush is saying to congress today(photo below) : Walking away with his american flag that hes going to burn… I could imagine Bush is ready to pass this mess on to a new president to handle. He’s served through some rough times.

This market environment is extremely tough. Confidence is low, risk is high, and the possibility of losing money is legitimate considering the large swings we are seeing if you are trying to make that gamble of betting on how this market is going to react. I’m sure a lot of people lost money today trying to bet on the bailout plan. I held off from placing any bets on this bailout plan as the market had made a rally into last weeks close which discounted the bailout plan. The typical “Buy the rumer, sell the news”. I Was expecting the decline today in the markets but not a 780 point move in the dow haha!

Although this bill didn’t get passed i’m sure that there will be some kind of resolution to this chaos with a new bill soon. I highly doubt they’re just going to walk away and see how things pan out without coming up with a new plan. If no plan is enacted more banks are going to go under, more risk and uncertainty will cloud the atmosphere of the markets. Listening to CNBC we should be expecting some more news about the resolution later this week with more negotiations.

Look at Technical Analysis of the Dow Jones index it has been in a steady downtrend for nearly 1.5 years suggesting we’ve been in a bear market with short term bull swings which only last to the upside resistance level of the descending channel in play. Todays 780 point decline pushed price down to the lower support level of the descending channel with a lot of bearish momentum into the close as we ended the day near its lows. Yet this support level suggests a higher probability of a bounce near this levels if history repeats itself. A breakdown and things could get worse, especially if congress and the bush administration are slow to act on a new bailout plan.