i'm amazed by people's reluctance to accept that indices can fall bout 12-15% and squeeze 12-15% within 3 months.
good point blackjack. in jan 1973 the dow dropped from a high of 1,063 down to 568 a drop of 47% in 11 months. what in the hell is stopping it froM doing it now?? nothing ! we have much more instability now and debts . and p/e's that doesn't even matter. it has gone up further than we thought and it will go down further than we think. and about this cutting corporate TAX BULLSHIT, " IT'S A CONSUMER PROBLEM "" THESE YOUNG INEXPERIENCED KIDS DON'T UNDERSTAND .THE CONSUMER IS TAPPED OUT !!!! BGP
OH NO!!!! 18k jobs, WORLD IS COMING TO AN END!!! NOBODY GONNA SPEND!! BANK RUNS!! NO CARS ON THE ROADS!! NOBODY AT THE MALLS! PANIC!! PANIC!!
That's a good thing! Like I said, too many Bull Brains out there. Resources have to go into the "reallocation" phase in order for a pause that will refresh. Bring on 11500, I don't care. Good Luck!
My time frame is not such that I spend much time analyzing long term technicals. But I have been around long enough, not to discount or not to fight them. I read the first three trading days of the year as a fairly logical occurence. The VERY VERY large holders of stock had a lot to gain by ignoring the bad news of the last quarter and supporting the market until the end of the year. Whether this selling triggered a technical breakdown and a continued a even larger and an accelerated sell off is the question on many traders mind. I have watched and done some shorting of whatever little strength the financials have shown for quite a while. I think the financials are key to the question where the market goes. Some may not remember but they were going down when the Dow hit the record 14k. Many have foolishly tried to call their bottom and catch the falling knife. Whatever positive signs or rallies they have had in the last few monthes were most likely due to short covering after the Fed attempted to prop them up. Yesterday, they showed a little flatness in relation to the rest of the market and indices. That in my opinion were the first signs of life without heroic CPR that I have seen from them in some time. I would at this point NEVER touch them on the long side, but if the really big money is starting to rotate into to them, that would be a big positive and probably reverse the entire market. Double bottom or triple bottom depends on the financials. I am not necessarily a conspiracy nut who readily accepts the existence of the Plunge Protection Team. But if powerful big money wanted to prop up the market they would buy financials. That may not be too smart, but it is just as smart to buy Citigroup here as it was when it was twice as expensive a year or so ago.
They know how far to manipulate the SPX and than make it turn on a dime. Have seen this 2-3 times in last few months. Magically the market capitulates to the upside. All three major indexes are oversold. Hence some kind of capitulation is in the wings. Many stocks are hitting 50 day moving averages right now. Once all the players are back on Monday we will know what the game is. In my Technical analysis I think we have yet to violate SPX's long term trendline on a 3 year chart. As long as we bounce off that we should see some higher highs.
Maudlin makes a really good point this weekend regarding the whole subprime/cdo/credit market fiasco which may further impact the financials in your setting. ACA, the credit market swap insurer, is set for a potential default on Jan 18th & looks like it may go BK (price has dropped from 16 to under a dollar) which may set off further ripples in the financials. In that scenario, I think there is a lot more room on the downside, particularly on the financials, and that event would probably be sufficient to allow the fed to ease (debt default is always deflationary). Timing is also relatively close to the end of the month fed meeting to allow for a non-emergency easing (with some pain in the market on the short term). More downside risk here than upside right now. Tough to be a value investor, isn't it?
<p>Although I have invested and traded in many ways, today I am but a very humble day trader. And I have no evidence other than that observation in my post, to believe the long term trend in the financials is anything but down. But as a trader you always have to be prepared for anything. People talk about fear and panic selling, but I also believe that there can be fear or panic buying as well. People who have the big positions see their positions put at such risk that they become so panicked they see nothing left to do but to irrationally buy. Of course, I am referring to the oil money that is in Citibank. The Saudis have been buying for years and how much of their position is below the current price is not known. A couple of decades ago, the Japanese got slaughtered buying NYC commercial real estate at the top. To me the oil money in the financials is the most interesting of questions. The mythology has always been that the oil money has been smart money. It looks like Citigroup will be an ultimate test of just how smart the oil money is. And will there be accelerated selling or will there be something akin to my pipe dream of something called panic buying. If the oil money did try to rescue Citigroup from a further downside, would we see a sell off in gold, where supposedly a lot of oil money is parked?
[After drop-ship crashes on them.] 'Hudson': Well, that's great. That's just fucking great, man. Now what the fuck are we supposed to do? We're in some real pretty shit now, man! Hicks: Are you finished? [to Ripley] You all right? Newt: I guess we're not going to be leaving now, right? Ripley: I'm sorry, Newt. Newt: You don't have to be sorry. It wasn't your fault. Hudson: That's it, man! Game over, man! Game over! What the fuck are we going to do now? What are we going to do? Burke: Maybe we could build a fire and sing couple of songs, huh? Why don't we try that?