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Stocks Collapse Post Inauguration

Jan 20 2009

Stocks Collapse Post Inauguration

What started out as a mildly weak day turned very much more negative after the Inauguration completed shortly after lunch. Stocks steadily declined all afternoon finishing sharply lower, 4% for the Dow Jones Industrials, near 6% for the Nasdaq, and 5.25% for the S&P 500. Financial's were the weakest of all the industries with questions about Citigroup and Bank of America still creating weakness across the board.

By Steve Patterson

Four Analysts struck both Citigroup (NYSE: C) and Bank of America (NYSE: BAC) today causing the two huge banks to reach market caps not since in over 15 years. Bank of America fell 28% on the day with Citigroup falling 20%. State Street (NYSE: STT) added to the misery falling 59% today on news that the transactions based financier would need to raise additional capital.

Investors Like the ETFs

Two short financial Exchange Traded Funds, the Ultrashort Financials (SKF) and a newer triple short ETF called the Financial Bear 3x (FAZ) provided investors huge returns on the day with the SKF moving 28.75% higher and the FAZ plowing to a monthly high up 41%.

Other ETFs saw plenty of action today with Small Cap Bear 3x (TZA) moving 20% higher on 5 million shares traded, the Ultrashort Real Estate moving 20% higher on volume of 23 million shares, and the Proshares Ultrashort China (FXP) up 17% on5 million shares traded. These ETFs have been very volatile and may continue to rally in the near term before collapsing themselves over a three day period sometime in the near future.

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