Monday, June 2, 2008

Lehman Teetering Again

I would love to be able to dismiss out of hand the various rumors that have been circulating about Lehman Brothers (LEH) over the course of the past few weeks. The fact is that Lehman seems to be unable to escape the Pig-Penesque cloud that has hung over the stock since the demise of Bear Stearns.

Lehman Brothers is down another 3% to 35.59 as I write this, with the prospect of another test of last week’s 35.00 support level coming soon. If 35.00 fails to contain the current round of selling, this could get ugly quickly and raise more questions about counterparty risk. I don’t like the looks of the LEH chart; clearly they are a long way from being out of the woods.

3 comments:

  1. For those that missed it, shortly after I put up this post, S&P lowered its long-term rating on LEH and moved the outlook to negative, taking LEH down to 33.58 in short order.

    S&P on Lehman

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  2. All the way out to October, the options tell a different story - they are far too cheap to reflect an insider belief that the company could go the way of BSC.

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  3. Bill, it's all about the earnings next week...and the quality thereof.

    If Dick unveils a reasonably justifiable balance sheet and acceptable losses, watch the stock shoot back into the high 30s in short order.

    The rumor was floating around that the LEH floor trader today went to the LEH post and put in an order for the firm of 500,000 shares.

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