- Where To From Here?

Market Summary
It was a wild week on Wall Street that left many traders wondering what will happen next. On Tuesday, the Federal Reserve announced that it will act as a lender of last resort by offering $200 billion in new credit for the major investment banks that need help from the pressures of the credit crunch. This news helped send the Dow up 416 points, which was the largest point gain for the index since 2002. Many traders were excited to see if the momentum would be able to continue because it was looking like this was going to be the catalyst needed to help relieve much of the unwanted pressure.

Unfortunately, the rosy picture of a potential reversal changed on Friday when Bear Stearns Inc. (NYSE:BSC) announced that it was pursuing financing from the Fed through J.P Morgan (NYSE:JPM). Bear Stearns announced that its liquidity deteriorated significantly and this news rekindled concern about continued weakness in the financial sector. As we mentioned in our previous report, many traders will choose to wait until next week for the Federal Reserve's interest rate decision because this could be the next major catalyst that will help send the markets higher.