Washington Mutual: Watch It At Today's Close

Aside from financials in general, the stock to watch at the close is Washington Mutual. After the close, Washington Mutual'ssharecount in the S&P 500 Index will be increased by 647 million shares to account for the conversion of preferred securities.

As a result of this announcement, analysts estimate the S&P 500 index holders will have to purchase about 51 million shares of Washington Mutual; that is about an entire days worth of average trading.

I am being asked why Freddie Macand Fannie Maeare trading down so much again (19 percent and 10 percent, respectively); as in all these matters, the most likely concern is short sellers continue to press the stocks on concerns over their exposure vs. their capital base.

On top of that, an article posted on the Fortune web site just before 2 pm ET may also be a contributor to the weakness. In it, the author basically goes over the recent Lehman Brothers analyst report, and is titled: "The Fannie and Freddie doomsday scenario: It's time to wonder what would happen if Fannie Mae and Freddie Mac failed."

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