It makes perfect sense. Automatic buy and sell orders will wring out every last dime of investor dollars not tied to the very same buy and sell patterns.
It's legal, quick, and effecient. As Martha Stewart will tell you "it's all gambling without inside information."
The Dow will settle down to 6000 before taking it's time to rally again up to 8000. It will float like a feather, moving back and forth with small ETrade Investors trying to catch the logic.
It doesn't have to make sense.
14000 made no sense. There was no corresponding data to support 14000, it was just there, with millions of people dumping in billions of dollars on speculation.
The one thing I learned on the Seattle Bubble was that the financial markets are the engine that drives profits.
So, if credit dries up where are the profits coming from?
The assets for any corporation are Real Estate. Intellectual property not so much any more, tech market is withering while I type.
If credit, and Real Estate are tanking what does the stock market have to offer?
We experienced a drop of 80% during the great depression, and your 1-2k predictions would be a 86-93% drop.
Fact check: The Dow Jones went from a peak adjusted close of 381.17 on September 3, 1929 to the bottom during the GD at an adjusted close of 41.22 on July 7, 1932, for a total drop of 89.2%.
Fact check: The Dow Jones went from a peak adjusted close of 381.17 on September 3, 1929 to the bottom during the GD at an adjusted close of 41.22 on July 7, 1932, for a total drop of 89.2%
Thanks for correcting me; I should of looked at the data instead of trusting the book I'm reading. Sniglet's prediction makes more sense now (I'm still leaning towards bottom of 4-6K).
Sniglet's prediction makes more sense now (I'm still leaning towards bottom of 4-6K).
Don't forget that the Nikkei lost 80% from it's 1980s peak, which would be somewhere in the 2000 range for the Dow. Unfortunately, I think that this downturn is going to be worse since the global economic environment is so bad. Things wouldn't be nearly so dire if it was just ONE country or region that was hurting.
Keep in mind that we have been through a completely unprecedented multi-decade period of credit creation, which led to an abandonment of prudent investing and pricing of risk. The unravelling of all this credit is going to be similarly unprecedented.
It'll be interesting whether we rally above 8K, I'm predicting no. Let's talk market strategy. I plan on making 4 large buys(simple indexes) for the long term as we go down to avoid missing the bottom. Trying to be disciplined, so chose at 7K, 6K, 5K, 4K since I'm thinking(hoping) we'll bottom in the 4-6K range. Must admit, though, I'm really second guessing my predicted bottom, because of Tim's graph at http://timothyellis.googlepages.com/Dow-Jones-Crashes.png.
(as a disclaimer, gonna keep most of my surplus assets in cash)
i guess my prediction is that once the whispers start that GM is going to fail in a matter of days that the dow will fall through 8,000
so, dow closed below 8,000... did CDS on GM spike today?
for tomorrow, i'm going to guess that the market opens down on pessimistic selling, rallys sharply back above 8,000 on concerns it is overbought, and then sells off late as hedge fund unloading takes over and it closes down lower by 300+ points.
although if it either drops straight down -800 points or melts-up +800 points i wouldn't be surprised. i don't have anything riding on this game right now.
Don't forget that the Nikkei lost 80% from it's 1980s peak, which would be somewhere in the 2000 range for the Dow. Unfortunately, I think that this downturn is going to be worse since the global economic environment is so bad. Things wouldn't be nearly so dire if it was just ONE country or region that was hurting.
Actually, I think that it might be just the opposite. The decline in Japan may have been worse precisely because it WAS an isolated issue. The Nikkei 225 decline happened over a period of ~14 years. Peaked at 38k in 12/89 and bottomed at 8k in 04/03. I think you need to factor in a couple of issues that occurred during that time frame which quite likely exacerbated the downturn in the Nikkei
- In the course of that time you had 10 years of deflation in Yen denominated assets. Japan was the only market in the world with deflation so would have the effect of discouraging Yen-denominated investment and encouraging flight of capital to other currencies
- Once that got started, the hedgies got into Japan with the yen-carry trade. I don't think you can discount the impact of that. Just about every dollar that was lent in Japan for most of the last 20 years was shipped offshore for investment in other countries. That further decreased investment/increased capital flight.
If this is now is a truly a "global" downturn then these factors won't exist in any single market- so if they exacerbated the Japanese downturn, using it as an comparison may not be appropriate.
for tomorrow, i'm going to guess that the market opens down on pessimistic selling, rallys sharply back above 8,000 on concerns it is overbought, and then sells off late as hedge fund unloading takes over and it closes down lower by 300+ points.
so far the open was about like I expected. the rally stalled before I thought it would stall (i was picturing up 100-200 around noon). if the inability of the rally to climb above 8,000 is any indication my closing estimate may be too optimistic.
I bet we're going to see a fresh round of "Stocks are cheap!", "We're below 2003's lows, imagine if you had bought into the market at 2003, you'd have made huge returns as long as you got out in 2007!".
Yeah, was anyone predicting a 12% sell off the last 2 days?
I think we'll see some of this recouped just before close as people get in place for tomorrow's rebound, but I'm glad I have no skin in the game anymore.
for tomorrow, i'm going to guess that the market opens down on pessimistic selling, rallys sharply back above 8,000 on concerns it is overbought, and then sells off late as hedge fund unloading takes over and it closes down lower by 300+ points.
so far the open was about like I expected. the rally stalled before I thought it would stall (i was picturing up 100-200 around noon). if the inability of the rally to climb above 8,000 is any indication my closing estimate may be too optimistic.
well, it climbed briefly above 8,000 right after i posted that, and then fell off the cliff i was expecting and i was too optimistic... -444.99
7,200 is the bottom from 2003 which should meet major resistance. probably wildly whipsawing tomorrow, i have no idea where it will go, but the 7,200 level should mostly hold for at least a day or two.
7,200 is the bottom from 2003 which should meet major resistance. probably wildly whipsawing tomorrow, i have no idea where it will go, but the 7,200 level should mostly hold for at least a day or two.
actually, i'll call it for bouncing off 7,200 (+/- 25) and then will close 400+ pts up at 7900+ for >700 pts of swing on the day.
at least there is major multi-generational support at 380 at the peak of the 1929 market... so we shouldn't make it that low tomorrow...
Futures look high, but is seems like the overnight international sucker rally is already loosing steam. Changing my guess to a wimpy sucker rally followed by a large drop.
7,200 is the bottom from 2003 which should meet major resistance. probably wildly whipsawing tomorrow, i have no idea where it will go, but the 7,200 level should mostly hold for at least a day or two.
But what about the S&P? Yesterday we broke through to 1997 levels...I really don't see any reason to believe a 7200 support for the DOW means much right now...
actually, i'll call it for bouncing off 7,200 (+/- 25) and then will close 400+ pts up at 7900+ for >700 pts of swing on the day.
called it!
more or less...
support was 7500 rather than 7200 and the swing was only 550 pts, but i got the big picture right.
so now we probably establish a trading range... i think monday will be a 300 pt up day unless the world ends over the weekend... then it'll find a top before the end of the week (8500-9000).
all bets are off if citigroup or GM announces a bankruptcy or we get another nuclear detonation in the economy.
7,200 is the bottom from 2003 which should meet major resistance. probably wildly whipsawing tomorrow, i have no idea where it will go, but the 7,200 level should mostly hold for at least a day or two.
But what about the S&P? Yesterday we broke through to 1997 levels...I really don't see any reason to believe a 7200 support for the DOW means much right now...
yeah, but the dow is still the headliner. we still watch the down and talk about triple-digit days on the dow. and i like to see all three indexes agree before calling a given trend -- similarly to how dow theory requires confirmation between the industrials and the transports, you can play the same game and add in the S+P and the nasdaq.
and all this discussion of "support and resistance" is really trying to guess other investors psychologies -- and the fact that we all talk about "support and resistance" and often heaviliy about the dow gives that index a lot of psychological weight at certain levels. in reality those numbers shouldn't convey any special meaning, but enough investors trade based on support and resistance levels and enough traders have written computer programs that basically trade on support and resistance levels that it conjures up some 'reality' to those levels. although mostly its useful for looking in the rear-view window and being able to figure out what the bulk of traders were thinking at a given time -- since we don't work on wall street we're just guessing about the psychology of traders when we're making predictions.
Another amazing day; my guesses were not even close. It was interesting how the media mostly focused on how the DOW went to 2003 levels instead of the S&P going to 1997 levels yesterday.
Comments
It makes perfect sense. Automatic buy and sell orders will wring out every last dime of investor dollars not tied to the very same buy and sell patterns.
It's legal, quick, and effecient. As Martha Stewart will tell you "it's all gambling without inside information."
The Dow will settle down to 6000 before taking it's time to rally again up to 8000. It will float like a feather, moving back and forth with small ETrade Investors trying to catch the logic.
It doesn't have to make sense.
14000 made no sense. There was no corresponding data to support 14000, it was just there, with millions of people dumping in billions of dollars on speculation.
The one thing I learned on the Seattle Bubble was that the financial markets are the engine that drives profits.
So, if credit dries up where are the profits coming from?
The assets for any corporation are Real Estate. Intellectual property not so much any more, tech market is withering while I type.
If credit, and Real Estate are tanking what does the stock market have to offer?
See my handy comparison graph here.
Thanks for correcting me; I should of looked at the data instead of trusting the book I'm reading. Sniglet's prediction makes more sense now (I'm still leaning towards bottom of 4-6K).
the 200-DMA is up above 11,000 right now, so there's a lot of room for a bear market rally, but i've been waiting for one for awhile...
it looks like we're testing the 8,000 level again, but the rallies keep getting more anemic off of 8,000...
i guess my prediction is that once the whispers start that GM is going to fail in a matter of days that the dow will fall through 8,000
Don't forget that the Nikkei lost 80% from it's 1980s peak, which would be somewhere in the 2000 range for the Dow. Unfortunately, I think that this downturn is going to be worse since the global economic environment is so bad. Things wouldn't be nearly so dire if it was just ONE country or region that was hurting.
Keep in mind that we have been through a completely unprecedented multi-decade period of credit creation, which led to an abandonment of prudent investing and pricing of risk. The unravelling of all this credit is going to be similarly unprecedented.
I figured it'd take at about another 2 weeks to get here...and I thought I was bearish.
Pattern correct, off on the scale. I need to refine my numerological estimates.
Tomorrow's (completely random) prediction: Support line sale down to 7500, afternoon bargain hunting back up to 7800.
(as a disclaimer, gonna keep most of my surplus assets in cash)
so, dow closed below 8,000... did CDS on GM spike today?
for tomorrow, i'm going to guess that the market opens down on pessimistic selling, rallys sharply back above 8,000 on concerns it is overbought, and then sells off late as hedge fund unloading takes over and it closes down lower by 300+ points.
although if it either drops straight down -800 points or melts-up +800 points i wouldn't be surprised. i don't have anything riding on this game right now.
- In the course of that time you had 10 years of deflation in Yen denominated assets. Japan was the only market in the world with deflation so would have the effect of discouraging Yen-denominated investment and encouraging flight of capital to other currencies - Once that got started, the hedgies got into Japan with the yen-carry trade. I don't think you can discount the impact of that. Just about every dollar that was lent in Japan for most of the last 20 years was shipped offshore for investment in other countries. That further decreased investment/increased capital flight.
If this is now is a truly a "global" downturn then these factors won't exist in any single market- so if they exacerbated the Japanese downturn, using it as an comparison may not be appropriate.
so far the open was about like I expected. the rally stalled before I thought it would stall (i was picturing up 100-200 around noon). if the inability of the rally to climb above 8,000 is any indication my closing estimate may be too optimistic.
So much for the bargain hunters saving the afternoon. Close around 7500.
I'm guessing sucker rally tomorrow in AM, then down we go.
I think we'll see some of this recouped just before close as people get in place for tomorrow's rebound, but I'm glad I have no skin in the game anymore.
No good news floating around. Sucker rally to 7700, bounce around midday, fire sale to 7200 by close.
Not even, tomorrow is a Friday. Lower trading. Sucker rally only gets to 7600, and sale stops at 7350.
well, it climbed briefly above 8,000 right after i posted that, and then fell off the cliff i was expecting and i was too optimistic... -444.99
7,200 is the bottom from 2003 which should meet major resistance. probably wildly whipsawing tomorrow, i have no idea where it will go, but the 7,200 level should mostly hold for at least a day or two.
actually, i'll call it for bouncing off 7,200 (+/- 25) and then will close 400+ pts up at 7900+ for >700 pts of swing on the day.
at least there is major multi-generational support at 380 at the peak of the 1929 market... so we shouldn't make it that low tomorrow...
Peaked at 7722 at 9:15 or so (EST). Here comes the fire sale!
But what about the S&P? Yesterday we broke through to 1997 levels...I really don't see any reason to believe a 7200 support for the DOW means much right now...
called it!
more or less...
support was 7500 rather than 7200 and the swing was only 550 pts, but i got the big picture right.
so now we probably establish a trading range... i think monday will be a 300 pt up day unless the world ends over the weekend... then it'll find a top before the end of the week (8500-9000).
all bets are off if citigroup or GM announces a bankruptcy or we get another nuclear detonation in the economy.
yeah, but the dow is still the headliner. we still watch the down and talk about triple-digit days on the dow. and i like to see all three indexes agree before calling a given trend -- similarly to how dow theory requires confirmation between the industrials and the transports, you can play the same game and add in the S+P and the nasdaq.
and all this discussion of "support and resistance" is really trying to guess other investors psychologies -- and the fact that we all talk about "support and resistance" and often heaviliy about the dow gives that index a lot of psychological weight at certain levels. in reality those numbers shouldn't convey any special meaning, but enough investors trade based on support and resistance levels and enough traders have written computer programs that basically trade on support and resistance levels that it conjures up some 'reality' to those levels. although mostly its useful for looking in the rear-view window and being able to figure out what the bulk of traders were thinking at a given time -- since we don't work on wall street we're just guessing about the psychology of traders when we're making predictions.
Uh, right now? Terrified and greedy as hell. Did I mention potentially desperate? Done.
That's long term, it doesn't explain the rally on friday.