It’s looking a little dicey this morning. Dow futures are down more than 300 points, the day after the market fell 335 points. Do you remember October 1987? The week before the October 19 Crash was very volatile. Here were the closing prices of the Dow that week:
Oct 12 – 2,471
Oct 13 – 2,508
Oct 14 – 2,412
Oct 15 – 2,355
BLACK MONDAY – Oct 19 – 1,738 (Negative 26% in one day)
On the Tuesday before the greatest crash in U.S. history, the market went up 1.5%. It went up 1.5% this past Wednesday because the Fed minutes said the world economy sucked. Back in 1987 the market fell big time on Thursday and Friday, losing 6% over two days. This caused the Wall Street shills to panic over the weekend and put in sell orders for Monday morning. The market dropped 2% yesterday and the futures are down 2% this morning. The question people are asking themselves is whether this is just a correction or prelude to another crash. The financial networks will tell you it’s a buying opportunity. They are paid to do so.
I actually have no idea what will happen. I won’t lose a penny if the market crashes. I’ve been out for a long time. I don’t trust the system, so I won’t be playing.
The German market has fallen 11% in the last three weeks.
The Hong Kong market has fallen 10% in the last three weeks.
The Japanese market has fallen 7% in the last three weeks.
Everyone expects the Plunge Protection Team to come to the rescue today. The market will open down big time. The Fed and their Wall Street owners will use their HFT supercomputers to ramp the market. Their ideal result would be a market that opens down 300 points and finishes up 100 points. They’ve done it before. Will they pull it off again?
That leads us to our poll question.
The Dow is currently trading at 16,659. Where will it be trading closer to on December 31, 2014?
A. 17,000
B. 15,000
C. 13,000
D. 20,000
E. It won’t be trading because everyone will be dead from ebola
F. It won’t be trading because ISIS has conquered our country
G. 8,000 as the world economy crashes and war breaks out with Russia
I don’t participate in predictions ….. it leads to a paper trail proving my idiocy.
However, if pressed, I would say that next month’s BLS report will show 3% unemployment. Irrational exuberance will spontaneously break out amongst all Wall Street traders as they spot “green shoots” everywhere they step.
That, coupled with Austrian insurgents shooting down a Singapore airplane carrying a Serbian archduke will send stocks to all time highs.
Damn paper trail ….
Ah, I’ll guess 17
17 would be drunk
Hub started drinking heavily yesterday, skipped off to work at 7 am to get a head start on today’s.
Apparently, and I wouldn’t take my investment advice because I surely don’t guess the numbers, but there is a direct correlation between hub’s drinking and reality asserting itself.
Which is markedly bearish.
I shouldn’t be happy that we just “lost” such a big part of our “savings” but I have to tell you, it feels pretty darned good to have your “crazy” theories come to life.
That didn’t take long.
Dow futures were down 350 points.
20 minutes after opening bell the market is up 80 points.
Well done Plunge Protection Team.
Of course this market isn’t rigged. It’s a free market. 🙂
I go with G, it fits my overall mood.
Bob.
Admin,
It is a “free” market just like Obamacare is “free” healthcare, public education is “free” education and we live in a “free” country.
Comment made on the ebola video thread, but meant for here.
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Ms Freud’s son …. the stock broker …. calls his mom briefly every morning to check up on her.
He’s such a nice guy.
This morning he said that ….. and I swear it’s true on my son’s soul …. “NOW is a great time to invest because prices are low”. And that’s fuckin’ verbatim.
He’s such an idiot.
It will be 17,000 – 20,000. The manipulations will continue until there’s nothing left to manipulate!
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My mother in law came to me 2 weeks ago saying that her financial planner/manager setup an urgent meeting with her to discuss the $100k she had sitting in money market funds. That money just had to be put to work NOW! They faxed over a proposal which included mostly agency debt (holy fuckin yikes!) but also equities including energy stocks. Luckily she took my advice and kept the funds right where they were in the money market account. I’m guessing the calls must be coming down from above to get every last sucker penny into stocks, junk bonds, etc. This shit isn’t going to be pretty.
Last week in Sept through the first 2 weeks in Oct often see Big declines (think 2008.)
I was betting that Sept 19th was THE top. I was not betting big, because several times I’ve gotten hammered for prematurity with market timing.
I’m playing with a new trend-following system (my paper trades are up 1000 in about 5 days) but the damned volatility is making analysis difficult.
My plan calls for identifying stocks that are breaking into downtrends. In screening stock after stock (hundreds of them) I tend to find most of them are already way into downtrends, too far for safe short-selling. I would not have believed how weak are most stocks had I not run so many through my filter. Here, with the averages still near all time highs, almost 10 times more stocks are making new 52 week lows than those making 52 week highs.
The stocks I’ve identified for possible short-selling on the next market open have gapped down so hard that I couldn’t touch them. HPQ is the poster child for this. I wanted to short it around $35.75, now it’s printing at $33.76 and is in a vertical downtrend.
The problem is that in a bear market, stocks can only decline 100%. In a bull market, stocks can rise to infinity, so attempting to “make money” in a bear market starts at a deficit dictated by the arithmetic.
The best thing to do is sit it out, but apparently that’s too difficult. I made a quick $50 today on a 30 minute hold time, but am back on the sidelines watching and wondering.
If Sept 19 really was THE top, I’d expect us to see a substantial plunge very shortly, followed by a recovery through November and December.
It’s the SECOND decline that is usually The Big One. Oct 1929 saw a big decline, but the market recovered into April 1930. It topped again there and spent 1930, 1931 and 1932 falling over 80%. The stock averages recovered in the 1940’s but an ACTUAL INVESTOR never recovered because ACTUAL INVESTORS owned shares of Stutz, Cord, and a host of other firms whose stocks went to zero and stayed in the grave.
I donned my Chicken Little costume in 1995, so I’ve been wrong a long, long time. Caveat Emptor. I still think what happens is that we topped Sept. 19, we will see a decline, a relief rally into early 2015, and then work lower and lower into summer of 2016, with the major averages down 50-70%.
A massive rally at that point will convince people that the same thing will happen as off the lows of 2002 and 2009. That will be Mr. Market’s Big Con Job, because after retracing 50% (or more) of the 2014-2016 decline, the markets will roll over again and drop to the lows of the year—–
1974.
I think the entire credit bubble will come out of the world’s economy by 2021-2023.
If you haven’t seen that before, you read it here first. I’m just repeating what I read elsewhere, based on others’ work that I think has merit.
TC, be careful of MMF’s. Ever since 2008 there’s been a concerted effort to undermine them and what they “invest” in.
In my humble opinion, there are no safe places left to “park” cash. Very few banks are rated well any more (all the money center banks are plain awful) so CD’s are no safe haven either (even though I use them.)
If the markets truly do fall apart in coming years, the banking system will come under unprecedented strain. We’re not there yet, by any means, but if stocks fall 20, 40, 50% I figure the banks will be on borrowed time.
2014-10-10 06:32 by Karl Denninger
Anatomy Of A Dislocation-In-Process
No, this is not a crash call.
It is, however, a warning – that you should beware of the conditions that have preceded severe market dislocations before, be aware of them, pay attention to them, and contemplate whether it is worth being involved in the market at this particular time.
Market dislocations come from many causes but have one common precursor — over-extension of credit (margin debt) that must be rapidly unwound. The are seeded in an environment that is generally volatile in the negative direction, thus exposing a greater percentage of those positions to margin calls. They are usually accompanied by or associated with an expiration of one or more instruments that provide alleged “protection” against such volatility, where the cost of their replacement is high.
The precise trigger for the event itself is usually analyzed in the wreckage that follows with all sorts of books and papers, yet the fact is that none of those are more than a guess. In 2000 a little dog-crap public firm (that incidentally still exists!) was, to the best of my ability, the triggering event — they announced a restatement at an inauspicious time. 2008 was of course blamed on Lehman, but in fact Lehman was a symptom, not the problem itself.
Every night someone wakes up in a cold sweat and pushes the flatten button. Someone else wakes up with delusions of grandeur in their eyes and mashes the buy it all button.
The dislocation itself happens when a lot of the first group show up at once and few or none of the latter do, and then the phone starts to ring on the desk (or in the hand, nowdays) of all the people who didn’t mash that flatten button — and they’ve got a big fat margin loan out that has now driven their account into negative equity.
Cascade selling comes from people who are told they must sell because the margin clerk is on line #1 and he’s just advised you that if you do not deliver good funds to him within the next hour you will be forcibly liquidated and, if you still have a debit balance, they will next lien all your assets, including in most states your house.
I will note that despite all the crying and screaming in the last two of three days, and the elation during one of them post Fed minutes, the conditions are not ripe, at this particular moment, for that to happen. It doesn’t mean it can’t, just that it’s not all that likely that today is the day. I can no more see into people’s bedrooms at 3:00 AM than can you.
But — and this is the point to consider — the fact that such events come not from a market that is “topping” but one that has started to decline and where volatility is rising means that the time to contemplate saying “That wisp of smoke may mean the curtains are on fire” is not the day before the event, believe it or not.
If you wait until then you’re probably 10, maybe 20% off where you should have sold and gotten out. You gave that up simply based on hope and hype, and the difficulty of selling in that environment when you’re that far down from where the pretty number on your screen said you were (all fake money, by the way, until you sell) is well-understood.
It’s hard to bail on a position that’s 10 or 20% down from where it was. It’s even harder to bail on an entire portfolio that’s down 10 or 20%. The simple fact is that it is a near-certainty that if you wait until that happens you probably won’t bail at all and thus you’ll take the entire ride down or far worse, sell at the bottom in the depths of panic.
And that’s the best argument for doing it before that pattern — and the decline from that top occurs, especially if you’ve got positions that are up 20, 50, or even 100% or more over the last couple of years.
Pigs get slaughtered.
The S&P 500 is clearly in a daily downtrend and trading below its 13 & 26 day EMAs (exponential moving averages.) That said, the weekly trend is still up and unbroken, so the other technical measures (MACD, Stochastics, Williams %R) being oversold and not confirming new lows, plus very clear chart support at 1900 or so, may argue that this time is no different than the last several times, and shortly we’ll be off to the races and New All Time (Nominal) Highs.
There is always good evidence to support whatever bias you bring in the door to the casino.
This is why after 20 years of more losses than gains, I’m trying something new, identifying individual firms whose common stock is clearly in a downtrend. This way, even if I’m wrong on the overall market direction, all I have to get right is one firm whose downtrending stock may be signalling that all’s not well and bad news is coming.
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15,000 is what I think, I’m guessing a continuation of one to two percent drops followed by smaller bounce backs creating a stair step curve down to 15,000, that being said the longer the downstairs trend continues the bigger the drops will be as folks get increasingly uneasy, as soon as one jumps they will all jump until some type of bottom is established. Then of course you buy the fucking dip. Put your money in your gun safe and hang on.
Martin Armstrong Warns “A Mad Max Event Is Possible”
We are at a crossroads. The tree has been cut. Which way will it fall – authoritarian or democracy? We can make a difference.
Step one is understanding what is the problem. At least then we can address a solution with some reasonable game plan.
mad-max
We have a great convergence coming. It is nothing to be afraid of and it is nothing we can ignore. Yes a Mad Max event is possible.
The average person depends upon government tremendously – even those not on welfare. There are pensions and Social Security that people really believe they are “entitled” to and thus these benefits will exist. What happens when they realize they do not?
Socialism has even changed the historic bounds of family. You had 4 to 6 kids for that was your retirement. The kids knew they had the responsibility of taking care of their parents. Today – that’s government’s job. Everything has been changed to depend upon government that never tells the truth and they will defend to the very last drop of your blood.
Marriage-Medeval
Marriages were ARRANGED! The age difference was typically 25% during the 19th century. To sell movies, Hollywood turned lust into love at first sight. They painted the image of happily-ever-after. I spoke with film makers and they all said people did not want to leave a movie feeling depressed. They glorified marriage and set unrealistic standards. Consequently, the age difference collapsed and the divorce rate rose to 60%+ because of unrealistic expectations.
Pensions began as the marriage contract. The man had to first establish himself and then propose. The Dowry was all about ensuring the wife would be secure – the pension. It was not about “love at first sight” yet according to things like Match.COM, 70% of people dating expect love-at-first-sight. So many people have the wrong expectation of marriage and are thus doomed from the start.
Even the Black family was stronger than the white family before welfare. When you paid women not to be married and to have children, you change the family structure. Socialism has significantly altered the behavior of every race all based upon expectations of government.
MA-FeedingBird
Free food changes behavior be it people or animals. Being compassionate is to be human. To give a man a free fish and you feed him for a day. Teach him how to fish and your feed him for a lifetime. Government adopted the first strategy to create dependency upon the political system.
They tell you do not feed the bears in Yellowstone National Park because they then look for free food and no longer hunt. Humans are no different. What happens when government collapses and people are totally unprepared because they never thought government collapses?
I use to go to this old Jew Junk dealer and he wouls give me words of wisdom. One of his sayinfg was, “Venn it iz raining, git out of da rain”. Smart man
No prediction, just a comment:
Just as a tornado watch is “conditions are right for one, but none has yet been sighted,” next week should have a crash watch.
By my analysis, the Nasdaq 100 and S&P500 are clearly now issuing a daily SELL signal, and look to be closing on or near the lows of the day.
No one knows the future, but sometimes the weatherman is right and that low pressure zone moving in from the west brings a major storm. This could be one of those times.
I bought a couple short-dated puts as a weekend speculation.
Market closed 214 points off its high for the day, at its lows.
1987 ghosts are stirring.
Enjoy your weekend.
Don’t worry about Monday.
What’s the worst that can happen?
The CDC quarantines your ass indefinitely because some clown on your plane has a fever?
SPX closed pretty much on chart support.
What “everyone” sees tends to be meaningless. Blind traders can see that chart support level, so it too will likely prove meaningless.
Given the behavior so far, the odds seem to favor a much harder decline. The dominant narrative remains, “Let prices go lower so I can buy at a better market entry.”
This is not what happens at important lows. People are now fully conditioned to think all declines are “corrections.”
Corrections, by definition, are pauses in an incomplete trend, and the dominant narrative is that stocks will go up, stocks only go up, and if they go down, the Fed will make them go up.
Until we stop seeing the word “correction” used endemically, I give the benefit of the doubt to DOWN. Even temporary lows require a little fear.
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The Dow Industrials have now wiped out their 2014 gains.
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The Russell 2000 “small cap” index is getting destroyed.
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And even the zoom-to-the-moon Transports are looking sick.
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G. 8,000 as the world economy crashes and war breaks out with Russia
Every statistic from the government and Wall St. is manipulated smoke & mirrors. Just the hint of a slight breeze of a feather from true reality could bring the entire house of cards down.
I pick C – 13000. Traders will still be in shock but still trading. In their drug induced stooper, the shit flying all over the place will be considered chocolate. Dec 2015 is a different story. Obola has resigned due to an impeachment investigation. Eloba’s antivirus treatment no longer works and the virus has morphed Ebola 2.0 that causing paralysis and instant death. The supermarkets have electric fences and armed guards at the entrances.
I’ll hedge my bets by suggesting_
E. It won’t be trading because everyone will be dead from ebola
F. It won’t be trading because ISIS has conquered our country
G. 8,000 as the world economy crashes and war breaks out with Russia
– or a not-so-subtle combination of all three!
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