Irish eyes may be smilin' but Bear Stearns shareholders are cryin' after JP Morgan Chase agreed to buy Bear Stearns for a paltry $2 a share. With banks afraid to lend to other  banks because they  fear that they will not get paid back, we look for  further tightness of liquidity and this has caused Bear Stearns to crumble.

 

Bear Sterns was particularly vulnerable as some of their major hedge funds took massive losses which made it tougher for them obtain credit. Bear Stearns relied heavily on the $4.5 trillion securities REPO market and when that dried up the hand writing was on the wall.

 

Of course all of this news means more flight to safety buying. The Fed cut the discount rate by a quarter point  and is expected to cut the Fed Funds rate as well. That could happen as early as today or depending on the market action, it may wait until the regular meeting tomorrow.

 

For oil, once again, this is bullish news.   As traders look to hedge themselves from finical turmoil they are looking to buy any commodity they can get their hands on and oil and the rest of the complex should get a sharp spike higher  off  the news.  Oil's fate will then  come down to the perception of the current state of the crisis. If the stock-market rebounds and we get a little of that Irish optimism, then oil could come back down to earth. For day traders it's like  finding a pot of gold! And with gold trading over a $1000 a ounce, is not a bad deal.

 

Have a happy St Patrick's Day! And if you have a hankering for the making of the green you should be watching me on  the Fox Business News Network and  get a free trial to Alaronenergies! Just call me at 800-935-6487 to open your account with Phil Flynn!

 

Stopped on  short April crude from apprx 11020  at apprx  11120. Buy May crude at 10600 -  stop 10500.

 

We're short April RBOB from apprx  27400 -  stop 27500.

 

Buy April heating oil at 29900 - stop 29400.

 

Buy April natural gas at  967 -  stop 957.

 

Have a GREAT day!