Dow Takes 7% Whack, But in the Scheme of Things… * Meh *
September 30th, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
In terms of the percentage, it was the 17th biggest decline. When it’s a grand a day, for a few days, that’ll really start to rattle the chook house.
This is definitely not a recommendation, but, if it’s another down day, I’ll be looking to buy deep out of the money DIA calls on the assumption that evil will prevail and that some bailout package will be passed. Also, technically, 10,000 is a major support. There’s a good chance that an ugly short squeeze will be touched off somewhere in here. As usual, sell into the bogus, nonsense crank to the upside because it almost certainly won’t last.
Here’s what I think happened on yesterday’s bailout vote.
It was hugely unpopular with people of all political stripes. My guess is that many in Congress thought, “I’ll vote ‘no’ in order to cover my ass in November and it’ll pass without me anyway.”
So, it didn’t pass, but something like it almost certainly will pass, in the dark of night, as the cockroaches scurry about.
Via: Houston Chronicle:
Even before the opening bell, Monday looked ugly.
But by the time that bell sounded again on the New York Stock Exchange, seven and a half frantic hours later, $1.2 trillion had vanished from the U.S. stock market.
What had started 24 hours earlier, with a modest sell-off in stock markets in Asia, had turned into one of Wall Street’s darkest days. The Dow Jones industrial average tumbled 777.68 points, just shy of 7 percent, to 10,365.45, its lowest close in nearly three years. The decline also surpasses the record for the biggest decline during a trading day — 721.56 at one point on Sept. 17, 2001, when the market reopened after 9/11.
But in percentage terms, it was only the 17th-biggest decline for the Dow, far less severe than the 20-plus percent drops seen on Black Monday in 1987 and before the Great Depression.
A huge drop in oil prices was another sign of the economic chaos that investors fear. Light, sweet crude fell $10.52 to settle at $96.36 on the New York Mercantile Exchange as investors feared energy demand would continue to slide amid further economic weakness. And gold, where investors flock in search of a relatively secure investment, rose $23.20 to $911.70.
Across Wall Street, no one could quite believe what was happening on the floor — the floor of the House of Representatives, not the stock exchange.
As lawmakers began to vote on a $700 billion rescue for financial institutions, the trading desk at Voyageur Asset Management in Chicago went silent. Money managers gaped at a television screen carrying news that seemed unthinkable: The bill was not going to pass.
Frustration, and then panic, coursed through the markets. Investors feared the decision in Washington would imperil the financial industry, as well as the broader economy.
SPX support 10000, is 4/8ths harmonic on the s&p, it will NOT break the first time it is hit. Bounce tgt from there would be 1062.50, then 1125. Hypothetically speaking, both would be good places to enter the shortside, if confirmed by your own magic tea leaves, of course 🙂
interesting times, my friends.
keep to the light;
cybele
Yeah, even though yesterday was the biggest single-day point-drop ever for the Dow-Jones Industrial Average, I wasn’t exactly hearing the blasting of Gabriel’s Trumpet. What people need to remember is that the stock market has become so psychologically important that its prices have been kept artificially inflated for a rather long time, now.
I know this is probably the Recovering Democrat in me who is not completely “over it”, but it was hard for me to understand that it was the Republicans in the House who really sunk this, and the Democrats were totally “on board”. I could speculate, but it probably wouldn’t be very accurate and might just end up encouraging me to fall back on my mainstream middle-class liberal brainwashing about US politics.
@Loveandlight: Speculation’s what posting on the internet is all about! Knock yourself out!
And here’s mine:
1) the Democrats are the worst spin artists on the planet
2) the Republicans are the best
3) the Democrats have been clobbered, coming and going, by the Right over the last 8 years, and, like they were with Iraq, the Democratic leadership is motivated only by the fear of being blamed for some future “disaster”.
Given the above, it’s not surprising that the Democratic leadership would push a bill that abdicated Congress’s Constitutionally mandated power of oversight and hand it over, lock, stock and barrel, to Paulson in the Executive. (Here’s the draft as published on the NYTimes: http://graphics8.nytimes.com/packages/pdf/business/20080928bailout_text.pdf. The “oversight” is completely toothless — Paulson can do whatever he wants.)
Just like any case of ongoing abuse, the behavior of the abused is fairly predictable: it will do whatever it can to try and win the favor of its abuser.
Hats off to the 40% of Democrats who still have some spine left, and proved it yesterday.
“Frustration, and then panic, coursed through the markets. Investors feared the decision in Washington would imperil the financial industry, as well as the broader economy.”
Yeah, it’s always the politicians imperiling the financial industry, never unparalleled greed, risk and assertions that “this time it’s different – it’s a whole new model”. Or “if I can make heaps of money levered 10:1, why not go 20:1 or 30:1?”
I’m not sure about what you are saying Dagobaz, but Dad bought in heavy into energy stocks in the crash of 1987-1988 – not sure of the dates here. Mom tried to cancel Dad’s purchase. She thought Dad was nuts.
Mom’s money is out of stocks. And I rested well last night because of this. Dad would be telling me to buy.
I for one don’t like this market at all. The only place in stocks I am potentially considering is the Central Fund of Canada, and/or more in the Merk Fund.
The rest of the casino of Wall Street is flipping and twitching too much for me.
I’ve already pulled my cards off of the stock market table.
I don’t have the stomach for the game.
Eileen:
Yep, pretty much everything is in my money-market fund, by now. Now that this necesarily “saves” me, of course, as we all know from recent news-items posted here.