There were two big rumor events in the last 24 hours. Both rumor events turned into news and both had a huge affect on the underlying instruments.

The first event we will discuss is what happened to Lehman Brothers yesterday. Yesterday morning at 10:40 AM, a rumor hit the market that Lehman Brothers would announce a 7 billion dollar write-down. Lehman shares immediately began to tank.

At 2:37 PM, Reuters had a news release on the rumor and the stock took another leg down. The article even cited sources that said the rumor was not true ... but it was too late because investors were panicking.

Lehman Brothers appears to have been the target of some pump and dumper. After the rumor appeared false to investors ... This morning at 9:21 AM in pre-market trading, the stock was up 3.98% on 1,248,700 shares. Lehman's chart for yesterday is below.

The other big rumor event was in China last night.

The Shanghai Composite had a heck of a ride last night.

It dropped to 3357.23 ... a mere 1.7 points from our last support level where a precipitous drop could have happened.

Then rumors started flying ... rumors of possible government moves to support the market ... and then rumors that the stamp tax duty on stock trading would be cut ... and then more rumors that the government might soon introduce stock index futures.

The rumors spurred buying and the Shanghai then rose 4.94% higher than the previous day's close.

Now, Chinese consensus is that their government better come out and support these rumors over the weekend or they will have a big problem Monday morning.

When rumors turn out to be untrue, then a stock or the market can whipsaw investors. The Chinese government is now in a pickle for Monday morning if they don't prove that at least some of the rumors are true.