Even a fire sale price of only $2 per share for a stock that was priced at about $170 only a little over a year ago required a $30 billion guarantee from the Fed before J.P. Morgan Chase would agree to take over of Bear Stearns over the weekend. "The fallout from poor hedge fund and subprime  mortgage loans has affected almost every investment bank to some degree or another in the last year so it’s logical to assume there may be other Bear Stearns situations waiting to be revealed," said Darrell Jobman analyst for www.TradingEducation.com

One of the banks mentioned often as being the potential next domino to fall is Lehman Brothers, whose share price dropped from about $85 in early 2007 to below $40 Friday and then tumbled to as low as almost $20 Monday. As traumatic as such a move might be to shareholders, users of VantagePoint Intermarket Analysis Software who use a 1-2-3 approach to buy puts or otherwise short a market were well-positioned to take advantage of Lehman’s woes.

VantagePoint, the flagship software of Market Technologies, LLC analyzes interrelated markets to produce predictive moving averages and other predictive indicators that lead or confirm traditional chart analysis. The indication to go short Lehman came on Feb. 29 when three of these indicators came together, as the vertical line on the chart illustrates: (1) The short-term difference of two moving averages moved below the long-term difference of two moving averages and below the zero line, (2) the propriety predicted Neural Index was at 0.00 and (3) the predicted medium-term moving average crossed below the actual medium-term moving average.

Traders who followed those three indications from VantagePoint would have been short in the vicinity of $50 per share. How well that trade will turn out remains to be seen, but it’s obviously the side of the market many traders would like to be riding at this point.