GM just had a 100 to 1 reverse split... essentially common holders are destroyed and GM will likely open at penny stock levels tomorrow.
On top of that, Bank of America is rumored to need 34 billion in new capital. For those who haven't been paying attention... 34 billion is half of their Market Capitalization. Which means if they have to raise the money by equity offerings, you are talking about 50% dilution.. and probably will be far higher by the time it finishes trading tomorrow.
This changes everything. News trumps all. And this is some freaking news.
GM is screwing over the bondholders and common. GM was getting government money. Anyone who is a bondholder in a government "assisted" company... (tons of banks).. is going to be freaking out tomorrow. Because the sudden realization that they CAN be wiped out... is going to sink in awfully fast.
I won't write off potential of lock limit down tomorrow. I won't say something like that often, but all the ingredients are there. Extended bear rally... horrible news.. this has potential of a no bid situation. There WILL be big money having a heart attack tomorrow.
It's tempting to go heavy short the open tomorrow and ride it down. But I think I may just watch the fireworks happen and see where it ends up and come up with a new plan.
Tomorrow is one of those days where what happens in the stock market will be the new main article on CNN 5 or 6 times during the day.
You won't hear about swine flu tomorrow.
GL
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