S&P Up 16; Dow Up 142

Is the cover of the latest issue of Fortune, one of those contrary magazine indicators? I'd say the shock has only just begun, but what do I know. The people in the know are profiled here: Buffet,Mack, Rogers, Paulson, etc. I've read through much of the Fortune articles which feature the usual talking head postulating on what happens next. The profiles section feature statements by the Buffets in their own words.

Away from the sensational Fortune cover... The angst continues at the Fed as it pulls out all the stops to stabilize the "conduit" of the financial system. A primary reason for Friday's stock market rally: New York Fed Accepts Asset-Backed Paper as Collateral (Update3), Fed accepting asset-backed paper as collateral, Banks Have $891 Billion at Risk in CP, Fitch Says (Update1) (thanks to Stuart for asking the insolvency quesiton).

But the stop-pulling doesn't stop there. The Fed is even nicely bending some rules: Fed bends rules to help two big banks (thanks to DonB for bringing this my attention).

There are many dark connotations to the above developments if they don't work, which seems likely since this problem is ultimately a OTC derivatives problem - yes, that little market with notional value of $30 TRILLION. It still appears, from a near term charting standpoint, as if the market has a shot at testing the 1500 level on the S&P 500 (a little above the 200 day moving average) perhaps as early as next week, or early in September. As we get deeper into the month, a retest and even breaking of the August lows is quite possible as everything from bank writedowns, the Fed meeting, earnings pre-announcements will be thrown at the market in September.