LEH files bankruptcy, AIG is next, MER stupidly saved by BAC

Premarket futures looking to gap down -3% at the opening bell with LEH going bk. With Hurricane Ike causing an expected $18 billion in damage to the Gulf Coast, take a guess how much AIG will have to eat given their own balance sheet is a mess of Level 3 Assets. In the words of the National Weather Service from four days ago, those who ignore Jim Rogers and casy's opinions "face certain death". Well LEH is today's casualty, so unless some other idiot such as BAC comes to rescue AIG, they are next.

Rumors have it that the Federal Reserve put a shotgun to BAC's head to make them save MER since anyone with common sense knows MER would have dropped to below $4 without BAC's intervention. After all if BAC was stupid enough to overpay $15 for CFC, they're stupid enough to overpay for MER.

With LEH's bankruptcy, the unwinding of LEH's positions will take place. The questions to ask are: 1) what could reverse the "sell" psychology? and 2) Could the Federal Reserve throw a surprise rate cut tomorrow or next Sunday before the bell?

Instead of worrying about the CNBC pundits or media chatterbugs, turn off the television and look at your playbook. You should have already written down how you will handle your positions given all scenarios. You can worry about why something moved a certain way AFTER you are out of the position; but until then, you should focus on your price charts, your technical charts, and what your signals tell you to do.