DOW Crashing ?!

Discussion in 'Trading' started by Bono, May 30, 2002.

  1. Bono

    Bono

    Steve,

    interesting question ! I haven't, but I'm sure it's not that hard to get ... lemme see what I can find ...
     
    #61     Jun 4, 2002
  2. your right steved , the dow would probably be under 100.
     
    #62     Jun 6, 2002
  3. lundy

    lundy

    if they did that, wall street wouldn't make any money.... all the money is of course made on the sell side by the big wigs.
     
    #63     Jun 12, 2002


  4. i would be interested in a correlation study based on the timing of crashes.

    my completely nonscientific intuitive guess is that big crashes happen either during extended bull markets (i.e. crash of 87) or they mark the immediate crescendo and finale of extended bull markets (i.e. crash of '29).

    So in other words, I don't have numbers to crunch, but I am hypothesizing that with the bull market long gone and no real 'supercrash' occurring as of yet, it becomes more likely that we are looking at a slow bleeder rather than a cliffjumper.

    Think about it- crashes happen when longs all panic for the exits at once. But when the longs have already died the death of a thousand cuts, they become desensitized to the pain and are no longer in a rush to pull the plug. If you bought AOL and Cisco in the 50's and are still holding, you won't exactly panic if they drop again from 20 to 15 or 15 to 10. You'll just sit there, pissed off and numb.

    Not saying we won't see another spectacular flameout one day, jus that the passage of time seems to tilt odds in favor of the chinese water torture method.
     
    #64     Jun 12, 2002
  5. lundy

    lundy

    the bull market is long gone, but the DOW hasn't even begun to crash so I wouldn't rule it out.

    However, I'm not talking about those kind of crashes, just the slow bleed ones with a few negative triple digit days :D
     
    #65     Jun 12, 2002

  6. oh- well in that case, that's not even really a crash.

    it's not as if there is a hard and fast definition, but i suggest a reasonable rule of thumb for a true 'crash' would be a minimum 5 percent decline in one day, or maybe even 10 percent. the dow would have to give up 500-1000 points to do that, and even that would be a baby crash compared to past percentage drops.
     
    #66     Jun 12, 2002
  7. I have already resigned myself to the idea that the nasdaq is going to slowly fade into a market of single digit stocks that most funds don't want to own. The trick is to figure out whether the Dow 30 will get dragged down along with everything else. I think the jury is still out.
     
    #67     Jun 12, 2002
  8. The dow is going to get slow motion clocked too IMHO.

    When future earnings are being discounted, no stock is safe, no matter how solid the business.

    And foreigners also have the capacity to bleed the market in a major way. They won't even have to pull out their holdings to do it- simply reducing the rate of net inflow by a third or a half will contribute bigtime to the pain.

    Some wiseguy columnist in Forbes or Smartmoney (one of those glossies) wrote a column a month or so ago, I forget what it was called, but I remember he had a sarcastic line something like this: "What is foreign capital going to do, invest in France (snicker)? Go to Japan or Asia or South America or some such place (snicker snicker smirk)?"

    To which the answer is yes, it probably will, because perceived value has a distinct relationship w/price and even after all the bloodletting, US stocks are still expensive relative to future earnings. And the fall of the almighty dollar will be the icing on the cake.

    happy happy joy joy
     
    #68     Jun 12, 2002
  9. Babak

    Babak

    The only foreign market that I know about with enough confidence to talk about is the Spanish market. Last year I started to see some surprising resilience. Although the general market index (IBEX35) was weak, reflecting US markets, individual shares were making new highs or consolidating earlier gains. I was a bit puzzled then. Now I checked in again and I find the same strength continuing.
     
    #69     Jun 12, 2002
  10. Bono

    Bono

    The last thing I heard about the crash :) is that the fed has a special fund, now ready to interfere if markets ever fall below last year's lows.

    The first time I read this statement I smiled (sarcastically), and then later on I went to the Federal Reserve Bank of NY's website, and came out with a big surprise : The Fed conducts daily market operations worth $150 Billion. I repeat DAILY. And when the daily turnover for both the DOW and NASDAQ is $40 Billion each, I got shocked !

    Does any care to comment on this ??!
     
    #70     Jun 13, 2002