Monday’s action in the US showed a big sell off in the last couple of hours.  The FTSE finished well up as it closed at the peak of the US market.  The Australian market finished well up today which was a bit surprising considering the US action.

Where to from here?  I am still waiting for all the markets to test the resistance levels mentioned in previous blogs.  Until these levels have been breached this rally is just normal.

The news today is all about AIG and the bonuses and President Obama’s resolve to rescind them.  Since the US government already owns an almost controlling share of AIG, I would like to see the whole management sacked without severance, and the whole show put back on a normal footing.  The current hierarchy feel secure because AIG is too big to fail, or more correctly the fear of unintended consequences if AIG is allowed to fold.  They FED/government made a mistake in allowing Lehmans to go under, so they are hesitant to allow AIG to go under.  Its all those counter parties to the insurance given by AIG. There have been dire warnings given against letting AIG to fail, but can they be allowed to continue?

As I write this the FTSE has just gone positive after 3.5 hours of trading.  The US futures look destained to be positive.  Though we still have tonights reports to come out t 8:30 EST. Building permits, housing starts, PPI and Core PPI.

As I have to get up at 4:30am I’ll have a look then, but for now a bit of R&R before bed.