Big Bailout Inches Closer

Good morning. Premarket futures show a positive bias as chatter suggests that Washington is inching closer to making a deal on the bailout with current expectations that we'll see a deal no later than Monday. Joining Bernanke & Paulson, Bush warned the country last night that a economic disaster awaits if Congress does not hand over $700 billion and soon.

Meanwhile, reports on the economy are far from great. In this morning alone, durable goods orders were down a much worse than expected 4.5%, jobless claims rose 32,000, and companies like General Electric cut their guidance and suspended its stock repurchase plan. With third quarter earnings season fast approaching, one certainly wonders if all of the bad news about the economy is already priced in at these levels.

Premarket gainers: FNM, FRE, TMTA, TOPS, HBAN, PCOP, WM, ABK, WB, LIHR, CSUN, ARMH, UAUA, NKE, AAUK, AIG, MF, SVNT, ERIC, CLNE, RFMD, ETFC, COIN, & GU.

Premarket losers: SAFM, CRAI, PPC, GE, AMN, NMR, Q, TSN, RAD, COF, TYG, SIG, PAYX, BTE, & JCP.

We have reports on new home sales at 10:AM and more speeches from several Fed members including Bernanke throughout the day. For what it is worth, I keep hearing of expectations for a huge bailout rally once it is passed, which is odd since the consistent pattern has been to sell news of this nature. Perhaps this time will be different. Moreover, once the bailout debate is over, the market's focus will then turn toward the economy and earnings and, on that front, things do not look all that great. Just look at today's data as a prime example.

Indeed, staying a step ahead of this tape is never easy, but let's watch how the market deals with the bailout news. If the sell the news pattern remains intact, it will go a long way to confirm that the worst is far from over.

Go make it a great day!