Intra-Day Update: Keep Your Powder Dry

UPDATE 9:50am EDT: The markets seem to have quieted down on the following headlines:

•Stocks in U.S. Gain on Speculation Rescue Plan to Pass; JPMorgan Advances

•Senate Will Try to Revive Bank-Rescue Plan With a Vote as Soon as Tomorrow

Overnight the London interbank offered rate (LIBOR) reached an all time high on the failure of the bailout plan, and the market sell off.

“The money markets have completely broken down, with no trading taking place at all. There is no market any more. Central banks are the only providers of cash to the market, no-one else is lending.”

-Christoph Rieger, a fixed- income strategist, Dresdner Kleinwort.

Berk and I are watching the markets right now and keeping our powder dry. If we are lucky the Senate will be foolish enough to pass some compromise of the bailout on their end, hoping to invigorate an agreement over at the House. If that happens, expect a major bounce – Christmas time for us nefarious bears. Well, one can dream – I for one am encouraged to see the Dow retrace 250 points overnight.

We’ll keep you folks in the loop with thoughts and ideas while we watch this sideways action today. I frankly don’t expect much to happen here as today is a Rosh Hashanah (Jewish New Year). Use this time to pick your new victims – watch our for retracements back to previous support lines. Remember, despite the focus on the averages, this is a ‘market of stocks’.

UPDATE 12:03pm EDT: For a good laugh point your browser here.

UPDATE 12:51pm EDT: Courtesy of our friends at TechCrunch – end result: The United Singularity:

UPDATE 1:16pm EDT: We’re planning to grab some R calls around 62 as risk can be managed very easily: