Where the S&P 500 is headed next

Treasury Secretary Tim Geithner is having his "Lucy" moment today. Yes, he’s got "a lot of explaining to do …" 
He’s speaking before Congress today to answer questions as to how the Public-Private Investment Program will actually remove toxic assets and protect taxpayer money at the same time. Also up for explanation is how the remaining $110 billion in TARP money is enough to fund any future bank rescues. 
I don’t envy Geithner one bit. That’s because there’s no way he can adequately answer these questions: 
If TARP’s $110 billion is sufficient, why is the government talking about accepting equity in return for as much as $200 billion in bailout funds?
How can you provide loans to private investors to minimize the risk of toxic asset purchases, pay the banks a premium for those assets and still believe that taxpayers can make off the deal? 
There’s no way everybody can make money of these deals. The taxpayer is taking on the most risk and has the most to lose.  
*****No word on why Geithner thinks $110 billion is sufficient to keep the bailouts rolling. Goldman Sachs mortgage analysts think another $400 in bank write-offs is coming. And the International Monetary Fund just doubled its estimates of U.S. losses from the financial meltdown to $2.7 trillion.
I think, however, we understand why future bailouts are still being discussed. Wall Street has Geithner in its back pocket. He will not make the tough choices, but instead continue to give Wall Street what it wants: money. 
*****Citigroup (NYSE:C) shareholders vote on their board of directors today. Amazingly, Bloomberg is reporting that the board will likely survive the vote. Unbelievable.  
At the meeting, CEO Vikram Pandit said this: "I fully recognize the loss of value" that investors have endured …"Our own people have paid a dear and heavy price." 
How nice, he feels our pain. I wonder if, when he says "our people", he means the confederacy of dunces that got Citi into this mess and missed their last bonus, or the secretaries, clerks and IT people who lost their jobs because of high-level incompetence? 
*****Bloomberg goes on to suggest that the Treasury should act to clean house at Citi if shareholders don’t. After all, the Treasury will be Citi’s biggest shareholder once $52 billion in preferred shares is converted to common stock. That means Geithner essentially owns Citi.
Will he make the tough choice and can Citi’s board? Don’t hold you breath. But if he does, it will be very interesting to see who he puts in there to lead this poster child for all that’s wrong with Wall Street and government. 
*****Can you tell I’m getting a little worked up here? 
*****OK, let’s talk stock market for a minute before I sign off. Last Thursday, I shared some of Jason Cimpl’s(TradeMaster Daily Stock Alerts‘ technical analyst) analysis on where the market was headed. You may recall he suggested the S&P 500 had as much as a 9% decline coming. 
Well, yesterday the S&P 500 got 4.2% of that drop. What’s next? Here’s what Jason sent his readers at 9:18 this morning … 
"Our [S&P 500] downside target is 779 with a chance of breaking 750. The market has noteworthy support levels between 805 and 820 so do not expect to profit overnight. Given yesterday’s selloff, we expect the indices to recover some lost ground in late-day trade today, or intraday tomorrow. Unless the market can make a new high, we maintain our bearish outlook."
*****In light of Jason’s expectations, I think we should take advantage of today’s strength and take profits on Hovnanian Enterprises (NYSE:HOV). As you might have noticed, Hovnanian is extremely volatile. And if the S&P 500 continues lower in the coming days, it will be lead by banks and housing. Hovnanian is up 31% since the $1.52 recommendation here in Daily Profit
If you bought Hovnanian, I’d love to hear it. Write me at editorial@247investor.com.
 
Also, I don’t mind to continue to hold Graham. It’s volatile as well, but in accordance to oil prices. Since oil has settled into a comfortable trading range, Graham should remain above my recommended entry price.
 
That’s it for today. I’ll talk to you tomorrow.
Published by Wyatt Investment Research at