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Market Outlook - Short Term
Tracked by: 0 Boarder
Market can fall by another 5-10% when we can start buying....
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Markets to crash furtherMon, Oct 13 02:38 AM
Indian equity indices, which observed its worst weekly performance in the recent past, last week are likely to hammer down further on the back of carnage in the global markets. If the dealers in the market are to be believed then there are no positive indications in the market which may boost the sentiments of the market.
Weak closing of the US markets might also mirror in the domestic markets for the first two days of the next week, say traders. Absence of any major trigger on the home front, the domestic markets is expected to look west and at its Asian counterparts for the direction next week.
Amitabh Chakraborthy, president equities at Religare Securities said, "At this juncture, I don`t see any positive triggers in the markets which can make a positive rally. Foreign Institutional Investors (FII) is continuously selling and they would continue doing it for some more time. In the coming days, we might witness further selling pressure in the markets, which may take Sensex further down and we might see the downside correction of other 20% in the coming days."
On Friday, last trading day of previous week, we saw Sensex down by 800.51 points or 7.07% and had ended the day at 10,527.85 points. The broader S&P CNX Nifty of National Stock Exchange (NSE) lost 233.70 points or 6.65% and had closed the day at 3,279.95 points.
However, dealers in the markets say that, Cash Reserve Ratio (CRR) cut by the Reserve Bank of India (RBI) by 150 basis point will infuse over Rs 60,000 crore in to the banking system, which might boost the sentiments of the investors in the coming days.
"Global markets are playing havoc and no one is sure how much more pain is left in the market. Apart from that intense selling pressure in the last couple of days in the domestic market is worrisome. Investor confidence has been shattered after the massive crack that the market witnessed last week," said an analyst from the leading broking house.
Analysts will also be watching out for more results, prime amongst them would be the HDFC Bank results this week
v.krishnamoorthy...
Tracked by: 0 Boarder
Hi! guys .. I advice everyone to remain cautioned and respect their money and invest or withdraw as per their risk profile, I want to stick my neck out and say that markets will rally at least 20 percent from current levels till March 2009..happy festive season....
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Hi! guys so who is the real papu, one who is selling at these levels or one who are buying at these levels, lets fast forward few years and look back and laugh on these papu FII`s buying stokcs again when sensex might have already gained 30-40%, FII and these funds managers always come to party when stocks are over valued and start selling when prices are undervalued, imagine what would they have earned by withdrawing money from India, when they were buying stocks at 21k levels sensex, and dollar at 40 levels and now selling at 10k levels and when dollars is 48-49 levels. I sometimes feel what intelligence level they have ....India and China even if their is a global recession will be growing at minimum 6% GDP now when all other economies are growin minus and India is growing at 6% money will bound to come back again, so dont be a papu by selling now, make them a papu when they come back at start buying at much higher levels. Happy investing...
Tracked by: 110 Boarders
Maximum downside of 3,050
Last week saw global carnage with all the major markets down by double-digits. The Nifty lost over 14 per cent at 3,279.95 points and it hit a low of 3,199 on Friday. The Sensex was off 15.95 per cent and the Defty down 16.65 per cent as the rupee tested support at Rs 49 before settling at Rs 48.72.
The FIIs have sold close to Rs 5,000 crore of equity in October and Indian institutions have sold about Rs 900 crore. Smaller stocks were harder hit with the Nifty Junior and the Midcaps 50 down 19.9 per cent and 21 per cent respectively. The BSE 500 was off 17.5 per cent. Volumes were moderate and calculation of advance-decline ratios was absurd, since there were almost no advances.
Outlook
Next week prices are likely to move between 3,050-3,450. By closing below 3,800, the market set a maximum downside target of 3,050-3,100, which could be fulfilled. Momentum indicators are oversold but prices could fall until short-covering is triggered close to settlement. But any bounce will be very sharp and a 200-250 point rise in a single-session is likely sometime next week. Either way, big intra-day swings are probable.
Rationale
There has seldom if ever, been a down move of comparable dimensions. Chart patterns of support/resistance are now based on mid-2006 trading patterns. Volumes have been low. There is no major short-term resistance between the Friday close of 3,279 and 3,450. A single session of buying could therefore drive prices up a lot.
Counter-view
Gut-feel says delivery-backed selling will continue, interspersed with occasional short-covering. But there is a chance the market could recover and consolidate with range-trading between 3,400-3,800. The intermediate downtrend started in mid-July and could mature over the next week or two.
Devangshu Datta
...
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by :
sambala
Global panic on markets as US bailout fails to stem credit crisis
A global tsunami of panic wiped nearly 8 per cent off the value of the FTSE 100 index today and hit other markets equally hard as investors decided that Friday`s $700 billion bank bailout would not be enough to ease the credit crisis.
The benchmark index on the London Stock Exchange closed at 4589.19, down 391.06, or 7.85 per cent fall, led by miners and banks. It was the third-worst percentage fall since the FTSE 100 was created in 1984.
Shares also plunged on Wall Street – the Dow Jones Industrial Average, which dropped below 10,000 for the first time in four years, was about 4 per cent down when trading closed in London - and across Western Europe.
In the emerging markets, however, it was nothing short of carnage. Russia`s RTS exchange suspended trading twice as prices dropped 19.10 per cent, the market`s worst ever one-day fall. Trading was also halted twice on Sao Paulo’s Ibovespa index after stocks sank 10 per cent and then another 5 per cent.
"There is all-out panic," said Adrian van Tiggelen, a senior strategist with ING bank in The Hague.
For policymakers and central bankers, it was a nightmare start to the week – little helped by the failure of EU leaders to agree on a European banking rescue scheme or even, it appeared, on a common strategy.
There was continued confusion as to the detail of Germany`s decision to guarantee all private bank deposits as Austria and Denmark broke ranks to follow suit and Spain threatening to do so if the EU did not take action.
Both Gordon Brown and Alistair Darling, the Chancellor, were working the phones. Mr Brown discussed the crisis with President Sarkozy of France this morning and was due to talk with Angela Merkel, the German Chancellor, later today to clarify Germany`s plans.
"In the last 24 hours, the Prime Minister and the Chancellor have been spending a lot of time on the phone. We continue to urge cooperation at an EU and international level," his spokesman said.
No stock was in positive territory on the UK benchmark index but banks were again among the biggest fallers. The Royal Bank of Scotland lost more than a fifth of its value, HBOS fell 19.8 per cent and Barclays shareholders saw almost 15 per cent wiped off the value of their holdings.
An emergency Commons statement from Mr Darling did nothing to calm City nerves – especially when it became apparent that he had nothing new to offer savers despite hinting at some "pretty big steps" yesterday.
As stocks fell, investors fled to government bonds and the relative safety of the Japanese yen, which gained 1.7 per cent against the dollar.
The euro was particularly hard hit by the failure of the leaders of Europe`s four biggest economies to agree on a co-ordinated bailout plan at a weekend summit, losing 1.2 per cent against the dollar and around 3 per cent against the yen.
"We are seeing an intensification of risk aversion overnight and the main beneficiaries are the yen and dollar," said Lee Hardman, a currency economist at Bank of Tokyo-Mitsubishi-UFJ.
"The market is in an extreme state of paralysis."
The markets were also in meltdown in Iceland, where foreign currency reserves have all but dried up because of the credit crunch.
The Icelandic crown lost a stunning 30 per cent of its value, following steep declines last week, as ministers worked on an emergency plan to save the banking system. All dealing in the shares of the country`s six major financial institutions were suspended.
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2009 Will Be `Very Tough Year`
The boss of global advertising and marketing giant WPP has told Jeff Randall Live that the "real world" will not feel the devastating effect of the credit crunch until next year.
Sir Martin Sorrell said 2009 will be a "very tough year" but predicted that there would be some recovery in 2010.
He said a number of big institutional shareholders had told him at a "very depressing" City roadshow that they were looking for a cut in the interest rate on Thursday.
Sir Martin blamed the market instability on the indecision and the "lack of leadership" among western governments.
Markets: Is Indecision To Blame?
The FTSE 100 suffered its worst day since the crash of 1987 and the Dow experienced a record one-day drop and was trading at its lowest level for four years.
The marketing guru said the delay in Congress passing a crucial plan to rescue America`s banks and the upcoming US election were partly responsible.
He said: "No senator or congressman wants to take a position that angers or enrages their constituent."
Sir Martin also criticised European countries for not having a concerted plan of action for tackling the problem.
He noted: "Ireland and Greece are going off on their own and now we`ve got Germany ploughing their own furrow."
Sir Martin admitted that more red tape was a consequence of governments pouring extra money into the banking system.
"If you go back in history, after 1928-29, there was excessive regulation, the pendulum always shifts too far," he said.
But he conceded it was understandable, given what happened recently with Lehman Brothers.
However, Sir Martin attacked the Treasury`s changes to tax rules that he claims will cost his company £60-70m.
He said it was a "difficult decision" to move WPP`s headquarters to Dublin but insisted the money saved will be plouged back into the British economy.
He added that there will be no changes to the number of jobs at the company.
...
In reply to:
Tough Time Never Last - Tough People do !!
Posted by : sambala
Developing Countries Fear Fallout
Signs of stress are growing on banking systems in many emerging and developing economies, the head of the International Monetary Fund has said.
IMF Managing Director Dominique Strauss-Kahn warned finance and development ministers that the more severe and protracted the financial crisis becomes, the more emerging and developing countries will be affected.
Already, stock markets in emerging economies have declined as investors flee riskier assets and businesses find credit harder to come by.
The IMF and World Bank meetings in Washington turned to development issues and poverty but worries about the global credit crunch remained front and centre.
Many developing countries worry that major economies, preoccupied with the financial crisis, will slow aid.
Banks are important to fund projects in the developing world and with tightening credit, resources will become stretched.
"The fallout for most banking systems in emerging and developing economies has been limited so far. But signs of stress are growing," Mr Strauss-Kahn told the World Bank and IMF development committee.
He flagged dangers in Eastern Europe, where domestic banks have built up large negative net foreign positions through foreign parent banks, which are vulnerable to market sentiment because a large part of their funding is from wholesale markets.
Also, banks have become increasingly exposed to struggling real estate markets. They have not experienced a significant increase in loan losses so far, but have increased provisions for bad loans and may be forced to reduce credit growth if asset quality deteriorates sharply, he said.
Mr Strauss-Kahn said the combination of tightening credit markets, rising domestic interest rates and the global growth slowdown could increase the force of the credit squeeze and rising defaults to a larger number of emerging markets and some developing countries.
On a positive note, he said strong growth rates would help cushion many emerging and developing countries from harder financial times.
Overall, he said emerging economies have so far escaped the declines to external financing seen in previous episodes of financial turmoil.
But that does not mean they would stay out of the direct path of the financial storm.
"Vulnerabilities are increasing and some countries with large current account deficits have had more difficulty financing them," Mr Strauss-Kahn said.
Sky News
Tracked by: 110 Boarders
Excellent article. SEBI`s decision reg. P note and SBL mechanism helped(FIIs), whose ultimate beneficiaries continue to remain faceless, are allowed to short sell physical stock with impunity through the PN route. Even the US has banned short-selling. Why should India allow foreigners bringing non-transparent money to India to profit from the bear market? We have no idea.
Instead of taking measures such as this, SEBI sent the wrong signal last week by reversing the policy on PNs and permitting foreigners to issue more of this paper at a time when they are withdrawal billions from Indian market and nifty may touch 3900.OK...
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by :
vtycoon
dude....pls sugest me..
m 2 lots short PNB @465....i have been holdin da shorts....wat do u sugest 2 me
Tracked by: 110 Boarders
What we have is a slavery modernized that whats going on in Usa.... if Sensex can run up from 9000 to 21000 in two years ...so can Dow....look what happen to USD in just two weeks.... though I think biggest gains might b in NASDAQ .........
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by : novice1000
dear ravipratap,
I have been telling that problem is severe. Where did i say it is a small problem. I guess you havent read my earlier msgs.
I was just telling pkjatt that even if US is not in recession, in that kind of matured economies, indicies will never move from 9000 to 21000 levels in 2 years.
Hope you got it.
The present crisis is second only to great depression in 1929 and this was known almost from the past one year.
regards
Tracked by: 0 Boarder
Developing Countries Fear Fallout
Signs of stress are growing on banking systems in many emerging and developing economies, the head of the International Monetary Fund has said.
IMF Managing Director Dominique Strauss-Kahn warned finance and development ministers that the more severe and protracted the financial crisis becomes, the more emerging and developing countries will be affected.
Already, stock markets in emerging economies have declined as investors flee riskier assets and businesses find credit harder to come by.
The IMF and World Bank meetings in Washington turned to development issues and poverty but worries about the global credit crunch remained front and centre.
Many developing countries worry that major economies, preoccupied with the financial crisis, will slow aid.
Banks are important to fund projects in the developing world and with tightening credit, resources will become stretched.
"The fallout for most banking systems in emerging and developing economies has been limited so far. But signs of stress are growing," Mr Strauss-Kahn told the World Bank and IMF development committee.
He flagged dangers in Eastern Europe, where domestic banks have built up large negative net foreign positions through foreign parent banks, which are vulnerable to market sentiment because a large part of their funding is from wholesale markets.
Also, banks have become increasingly exposed to struggling real estate markets. They have not experienced a significant increase in loan losses so far, but have increased provisions for bad loans and may be forced to reduce credit growth if asset quality deteriorates sharply, he said.
Mr Strauss-Kahn said the combination of tightening credit markets, rising domestic interest rates and the global growth slowdown could increase the force of the credit squeeze and rising defaults to a larger number of emerging markets and some developing countries.
On a positive note, he said strong growth rates would help cushion many emerging and developing countries from harder financial times.
Overall, he said emerging economies have so far escaped the declines to external financing seen in previous episodes of financial turmoil.
But that does not mean they would stay out of the direct path of the financial storm.
"Vulnerabilities are increasing and some countries with large current account deficits have had more difficulty financing them," Mr Strauss-Kahn said.
Sky News...
In reply to:
Tough Time Never Last - Tough People do !!
Posted by : ARB236
Hi, All Dear Friends,
My Greetings to Vipulbhai, Lifaylon, Sam (Callahan), Murli, Goldchest, EC Raja and everyone visiting my home page!!
I am back at MMB after a long gap...hope everybody is fine.
Markets seems to be "very near its Intermediate Bear Phase" and a very good pull back may be expected for some 8 to 12 weeks periods !!
Concentrating on NIFTY and BANK NIFTY Stocks / Futures (as may be preferable according to individual choice) will give excellent returns, my views are ONLY for Short Term Investments or Positional Trades with adequate risk management to account for sudden Up/Down for few days in between!!
Macro level fundamentals for INDIA v/s G-7 Nations still very attractive and given the very low present valuations of Indian Markets, relaxations in PNs norms, CRR cuts and lifting of FII Cap limit will add fuel to the fire in short term.
Long term Gobal outlook still remains very pessimistic and therefore large selling may emerge at higher level from FII and Hedge Funds + Operators combine !!
Very Happy Trading / Investing to ALL
Tracked by: 0 Boarder
Tycoon Follows Father Into Space
A British-born computer game designer has gone into space on board a Russian rocket, paying around £20m for his 10-day trip.
Richard Garriott, 47, from Texas, becomes the sixth space tourist and the first offspring of a Nasa astronaut to go into orbit.
His father, retired physicist Owen Garriott, spent 60 days there in 1973 and another 10 days in 1983.
The younger Garriott dreamed of space as a child and was shattered to learn that he could never become a Nasa astronaut because of his poor eyesight.
Before blasting off from Kazakhstan, the multi-millionaire said he hoped the trip would provide a strong model for financing private space travel in the coming years.
"What I am trying to do is demonstrate that you can mount a very successful campaign to go into space and beyond because it`s good business," Mr Garriott said.
Friends and family cheered as his Soyez rocket hurtled into a clear blue sky.
His father Owen Garriott, 77, said: "I`m elated, elated. He made it, he made it into orbit. It is marvellous".
His son`s girlfriend, Kelly Miller, added: "This is so cool. I am very happy for him. It is one of the things he really wanted to do. I can see he is really enjoying it like a little kid in the candy shop."
His crewmates on the landmark 100th manned Soyuz flight are veteran US astronaut Mike Fincke, who spent six months on the international space station in 2004, and Russian Yuri Lonchakov.
The rocket is due to dock with the international space station on Tuesday, where Mr Garriott will spend over a week conducting experiments.
He will also photograph Earth to measure changes since his father took pictures from the US station Skylab in 1973.
Mr Garriott said he managed to recoup a significant slice of his trip`s price through some of his experiments, involving sponsorship.
One of his most eye-catching ones has been to take the digitised DNA sequences of some of the world greatest minds and musicians - as well as athletes, video game players and others - to the space station.
The list ranges from famed physicist Stephen Hawking to comedian Stephen Colbert and Matt Morgan, best known as the "Beast" from the US television show "American Gladiators."
...
In reply to:
Astronomers witness start of SUPERNOVA
Posted by : sambala
In a stroke of cosmic luck, U.S. astronomers for the first time witnessed the start of one of the universe`s most fiery events: the end of a star`s life as it exploded into a supernova.
On Jan. 9, astronomers used a NASA X-ray satellite to spy on a star already well into its death throes, when another star in the same galaxy started to explode. The outburst was 100 billion times brighter than Earth`s sun. The scientists were able to get several ground-based telescopes to join in the early viewing and the first results were published in Thursday`s issue of the journal Nature.
"It`s like winning the astronomy lottery,” said lead author Alicia Soderberg, an astrophysics researcher at Princeton University in New Jersey. "We caught the whole thing from start to finish on tape."
Another scientist, University of California at Berkeley astronomy professor Alex Filippenko, called it a "very special moment, because this is the birth, in a sense, of the death of a star."
And what a death blast it is.
“As much energy is released in one second by the death of a star as by all of the other stars you can see in the visible universe,” Filippenko said.
Less than one per cent of the stars in the universe will die in a supernova, said Filippenko, who has written a separate paper awaiting publication. Most stars, including our sun, will get stronger and then slowly fade into white dwarfs, what he likes to call “retired stars,” and which produce little energy.
The first explosion of this supernova can be seen only in the X-ray wavelength. It was spotted by NASA`s Swift satellite, which looks at X-rays, and which happened to be focused on the right region, Soderberg said. The blast was so bright it flooded the satellite`s instrument, giving it a picture akin to “pointing your digital camera at the sun,” she said.
The chances of two simultaneous supernova explosions so close to each other is maybe 1 in 10,000, she said. The odds of looking at them at the right time with the right telescope are, well, astronomical.
Add to that the serendipity of the Berkeley team`s viewing the same region with an optical light telescope. It took pictures of the star about three hours before it exploded.
This new glimpse of a supernova seems to confirm, with few surprises, decades-old theories on how stars explode and die, scientists said.
That makes the findings “a cool thing,” but not one that fundamentally changes astrophysics, said University of California, Santa Cruz astrophysicist Stan Woosley, who was not part of the research.
The galaxy with the dual explosions is a run-of-the-mill cluster of stars, not too close and not too far from the Milky Way in cosmic terms, Ms. Soderberg said. The galaxy, NGC2770, is about 100 million light years away. One light year is 9.5 trillion kilometres.
The star that exploded – only about 10 million years old – was the same size in diameter as the sun, but about 10 to 20 times more dense.
The death of this star went through stages, with the core getting heavier in successive nuclear reactions and atomic particles being shed out toward the cosmos, Filippenko said. It started out in its normal life with hydrogen being converted to helium, which is what is happening in our sun. The helium then converts to oxygen and carbon, and into heavier and heavier elements until it turns into iron.
That is when the star core becomes so heavy it collapses in on itself, and the supernova starts with a shock wave of particles piercing the shell of the star,
That is the image Soderberg`s team captured from the X-rays generated by the supernova explosion.
Tracked by: 0 Boarder
Hi, All Dear Friends,
My Greetings to Vipulbhai, Lifaylon, Sam (Callahan), Murli, Goldchest, EC Raja and everyone visiting my home page!!
I am back at MMB after a long gap...hope everybody is fine.
Markets seems to be "very near its Intermediate Bear Phase" and a very good pull back may be expected for some 8 to 12 weeks periods !!
Concentrating on NIFTY and BANK NIFTY Stocks / Futures (as may be preferable according to individual choice) will give excellent returns, my views are ONLY for Short Term Investments or Positional Trades with adequate risk management to account for sudden Up/Down for few days in between!!
Macro level fundamentals for INDIA v/s G-7 Nations still very attractive and given the very low present valuations of Indian Markets, relaxations in PNs norms, CRR cuts and lifting of FII Cap limit will add fuel to the fire in short term.
Long term Gobal outlook still remains very pessimistic and therefore large selling may emerge at higher level from FII and Hedge Funds + Operators combine !!
Very Happy Trading / Investing to ALL
...
Tracked by: 110 Boarders
Exactly BSR,
Apart from TA which is signaling a pullback if markets fall another 10%, i feel optimistic about our markets in 2009.
Let a spark of optimism strike our investors the volumes will also increase gradually. The FII too know that the optimum growth destination is India. Time will settle everything.
The growth story of USI ( United States Of India) is bright.
regards
shakti...
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by : BullSheetRules
Dear novice1000,
Quote
believe it or not...except some small technical pull backs, dont expect any rally either in 2008 or 2009.
Unquote
At present, I am not that pessimistic about year 2009.
Let us hope for the best!
Quote
Next 2 years, it will be bargain hunting for LT investors.
Unquote
I am not sure whether market will provide that long time for stock picking unless Sensex goes below 8800 or Nifty below 2600.
I do not foresee this happening at present!
As mentioned before, currently Low Volume Game is going on!
Low Volume Game coupled with Price action may look FAR WORSE than that actually is.
Investors who are into this GAME should remain in the GAME at least till the expiry of this month. All prices will not collapse before Fed meeting at the end of Month! :) Keep a watch on YEN DOLLAR ratio! That is improving slowly. :)
Just do some Homework before putting any FRESH investments into the market!
I hope that clears some BS points for current situations.
Gud luk & happy investing! :)
Tracked by: 8 Boarders
But in a sign that banks were willing to take a chance on near-term lending, Libor, the overnight bank lending rate, eased to 2.47% Friday from 5.09% Thursday, according to Bloomberg . com. Libor was at 2.15% a month ago.
Treasury prices slipped at the end of the week, raising the yields. The benchmark 10-year note ended Friday`s shortened session at 3.88%. Treasury bond markets closed early Friday and are closed Monday for Columbus Day.
Other markets: Oil prices plunged $8.89 a barrel Friday, the second biggest decline ever, to settle at $77.70 a barrel on the New York Mercantile Exchange, a 13-month low.
Oil prices have tumbled on bets of slowing demand since the price of crude hit an all-time high of $147.27 a barrel on July 11.
...
In reply to:
SENSEX to rally by 2400 pts in 7 days
Posted by : sambala
On Friday, President Bush said that the government will continue to work to resolve the economic crisis to return stability to the markets. Meanwhile, House Democrats are meeting Monday to discuss a potential second economic stimulus package, although House Republicans are reportedly skeptical of a second package, CNN reports.
Looking for a bottom: Stocks have been in a bear market for most of the year, but the selling began accelerating in September following a series of bank failures and mergers.
Since hitting all-time highs a year ago, the Dow has lost just over 40% and the S&P 500 has lost 43%. The Nasdaq has not come close to reclaiming its tech-bubble record, but it did hit multi-year highs last October. Since then, the Nasdaq has fallen just over 42%.
And investors across the board are pulling money out of equities, with $43.3 billion pulled out of stock mutual funds during the week ended Oct. 8, according to TrimTabs Research.
"To some extent, we are seeing a retail investor capitulation," said Kelli Hill, portfolio manager at Ashfield Capital Partners. "And when everyone is getting out, that suggests we`re getting closer to finding a bottom," she said.
Wall Street was last in a bear market between 2000 and 2002 amid the end of the tech bubble, a recession and the terrorist attacks on 9/11. But stocks bottomed in October 2002 and then again in March 2003, leading to a more than four-year bull market.
On Friday, the three major stock gauges fell to within shouting distance of that March 2003 bottom. Some market pros are wondering if that 2003 level could turn out to be the bottom for the 2008 bear market also. (Full story)
However, bottoms are often "retested," meaning stocks fall to a low, bounce for a few days or even months, then fall back to right around that low, before making a bigger, more sustained advance off the low.
That`s what happened in the last bear market. Stocks bottomed in early October 2002, bounced a little bit in the lead up to the start of the Iraq war and then retested those lows in March of 2003 before moving higher.
Either way, the analysts spoken with agree that when the market does finally put a bottom in place, it will lead to an extensive rally.
One comfort for investors is the knowledge that there are limits to how low the Dow can go, thanks to rules put in place in the aftermath of the crash of Oct. 19, 1987, when the Dow plunged 22.6%. The NYSE has rules to halt trading if the Dow loses 10%, 20% or 30% in a single day. Trading is halted for 30 minutes, an hour or two hours, depending on the time of day. Trading is over for the day if the Dow loses 30%.
The Dow`s 22% decline roughly compares with the two-day slide in the crash of 1929. On Oct. 28, 1929, the Dow fell 12.8% and it It fell an additional 11.7% the next day, according to Stock Trader`s Almanac.
Bear vs. Bull: Looking for a bottom
Credit markets frozen: Amid the ongoing crisis, lending has dried up, making it difficult for businesses to function on a daily basis and for consumers to get loans.
The TED spread, the difference between what banks pay to borrow from each other for three months and what the Treasury pays, spiked to an all-time high of 4.65% Friday before pulling back slightly.
The wider the spread, the more reluctant banks are to lend to each other, rather than from the federal government. When markets are fairly calm, banks charge each other premiums that are not much higher than the U.S. government.
Three-month Libor, or what banks charge each other to borrow for three months, rose to a 2008 high of 4.82% Friday.
The yield on the 3-month Treasury bill, seen by many as the safest place to put money in the short term, fell to 0.24% from 0.5% Thursday, with panicked investors willing to take a piddling return on their money rather than risk stocks. Last month, the yield on the 3-month bill skidded to a 68-year low around 0%.
Tracked by: 8 Boarders
On Friday, President Bush said that the government will continue to work to resolve the economic crisis to return stability to the markets. Meanwhile, House Democrats are meeting Monday to discuss a potential second economic stimulus package, although House Republicans are reportedly skeptical of a second package, CNN reports.
Looking for a bottom: Stocks have been in a bear market for most of the year, but the selling began accelerating in September following a series of bank failures and mergers.
Since hitting all-time highs a year ago, the Dow has lost just over 40% and the S&P 500 has lost 43%. The Nasdaq has not come close to reclaiming its tech-bubble record, but it did hit multi-year highs last October. Since then, the Nasdaq has fallen just over 42%.
And investors across the board are pulling money out of equities, with $43.3 billion pulled out of stock mutual funds during the week ended Oct. 8, according to TrimTabs Research.
"To some extent, we are seeing a retail investor capitulation," said Kelli Hill, portfolio manager at Ashfield Capital Partners. "And when everyone is getting out, that suggests we`re getting closer to finding a bottom," she said.
Wall Street was last in a bear market between 2000 and 2002 amid the end of the tech bubble, a recession and the terrorist attacks on 9/11. But stocks bottomed in October 2002 and then again in March 2003, leading to a more than four-year bull market.
On Friday, the three major stock gauges fell to within shouting distance of that March 2003 bottom. Some market pros are wondering if that 2003 level could turn out to be the bottom for the 2008 bear market also. (Full story)
However, bottoms are often "retested," meaning stocks fall to a low, bounce for a few days or even months, then fall back to right around that low, before making a bigger, more sustained advance off the low.
That`s what happened in the last bear market. Stocks bottomed in early October 2002, bounced a little bit in the lead up to the start of the Iraq war and then retested those lows in March of 2003 before moving higher.
Either way, the analysts spoken with agree that when the market does finally put a bottom in place, it will lead to an extensive rally.
One comfort for investors is the knowledge that there are limits to how low the Dow can go, thanks to rules put in place in the aftermath of the crash of Oct. 19, 1987, when the Dow plunged 22.6%. The NYSE has rules to halt trading if the Dow loses 10%, 20% or 30% in a single day. Trading is halted for 30 minutes, an hour or two hours, depending on the time of day. Trading is over for the day if the Dow loses 30%.
The Dow`s 22% decline roughly compares with the two-day slide in the crash of 1929. On Oct. 28, 1929, the Dow fell 12.8% and it It fell an additional 11.7% the next day, according to Stock Trader`s Almanac.
Bear vs. Bull: Looking for a bottom
Credit markets frozen: Amid the ongoing crisis, lending has dried up, making it difficult for businesses to function on a daily basis and for consumers to get loans.
The TED spread, the difference between what banks pay to borrow from each other for three months and what the Treasury pays, spiked to an all-time high of 4.65% Friday before pulling back slightly.
The wider the spread, the more reluctant banks are to lend to each other, rather than from the federal government. When markets are fairly calm, banks charge each other premiums that are not much higher than the U.S. government.
Three-month Libor, or what banks charge each other to borrow for three months, rose to a 2008 high of 4.82% Friday.
The yield on the 3-month Treasury bill, seen by many as the safest place to put money in the short term, fell to 0.24% from 0.5% Thursday, with panicked investors willing to take a piddling return on their money rather than risk stocks. Last month, the yield on the 3-month bill skidded to a 68-year low around 0%.
...
In reply to:
SENSEX to rally by 2400 pts in 7 days
Posted by : sambala
NEW YORK - The Dow ended its worst week ever Friday and capped a staggering eight-session selloff that has seen the blue-chip index fall 2,400 points.
Investors could be in for another rough ride as Citigroup (C, Fortune 500) and Merrill Lynch (MER, Fortune 500) are on tap to report results this week, giving another glimpse into just how deep their losses continue to be. And a slew of economic reports are also due out, including readings on consumer spending and housing.
Much of the Dow`s loss occurred over the most recent sessions as the global credit market crisis intensfied. In fact, last week the Dow fell just over 1,874 points, or 18%. The index has lost nearly 22% over the last eight sessions, as panicked investors ditched stocks across the board.
That panic also gripped the global markets, which have seen some brutal selloffs of their own.
"The magnitude of what`s going on is unprecedented and people are frightened," said Robert Philips, senior portfolio strategist at BLB&B Advisors.
Finance ministers from the Group of Seven nations said Friday that exceptional steps were needed to ease the global financial crisis and get money flowing again.
And early Saturday, the G-7 vowed to work together to stem the criris. Later in the day, the International Monetary Fund soundly endorsed the G-7 commiment, with IMF managing director Dominique Strauss-Kahn saying the crisis "had pushed the global financial system to the brink of systemic meltdown."
Wall Street lost roughly $2.4 trillion in market value during the week, according to losses in the Dow Jones Wilshire 5000, the broadest measure of the market.
And investor fear surged to record levels, with the CBOE Volatility (VIX) index, or the VIX, hitting a record just shy of 77 Friday, before closing a bit off those levels.
The Dow Jones industrial average (INDU) ended Friday`s session down just 128 points, after falling as much as 697 points in the morning. The Standard & Poor`s 500 (SPX) index also declined Friday and for eight sessions in a row. The Nasdaq composite (COMP) ended barely higher, following seven down sessions.
Paralyzing fear. Banks have clamped down on capital, with credit markets remaining frozen and several measures of bank nervousness hitting all-time highs. Treasury prices slumped, boosting the corresponding yields as investors no longer bet that government debt was necessarily so much safer than stocks. The dollar recovered versus other major currencies. And oil, gold and other commodities plunged on bets that slowing global demand will hurt oil usage.
"Investors are the most fearful they`ve ever been," said Phil Orlando, chief equity market strategist at Federated Investors.
The heightened volatility that has left investors seasick was evident in Friday`s market. In the first five minutes of trade Friday the Dow plunged 697 points, falling below 7,900 to the lowest point since March 17, 2003. The Nasdaq and S&P also hit more than five-year lows. But stocks recovered abruptly, with the Dow erasing losses. The afternoon saw the Dow make violent swings back and forth, toppling as much as 600 points and rising as much as 322 points.
Stocks have plunged despite a series of efforts on the part of the government to unfreeze the credit markets and get money flowing through the system again.
"Fear is feeding upon itself and nothing the officials have done to this point seems to stem the tide," said Ryan Atkinson, market analyst at Balestra Capital.
Last week, the Fed announced an emergency rate cut, coordinated with banks around the world. The central bank has also pumped billions into the system. But the moves have hardly made a dent in investor sentiment.
"Central banks of the world have been flooding the markets with liquidity, but banks are hoarding cash," Atkinson said. "This is the lynchpin of the entire financial system and as long as this is still going on, the markets will be driven by fear."
Tracked by: 8 Boarders
NEW YORK - The Dow ended its worst week ever Friday and capped a staggering eight-session selloff that has seen the blue-chip index fall 2,400 points.
Investors could be in for another rough ride as Citigroup (C, Fortune 500) and Merrill Lynch (MER, Fortune 500) are on tap to report results this week, giving another glimpse into just how deep their losses continue to be. And a slew of economic reports are also due out, including readings on consumer spending and housing.
Much of the Dow`s loss occurred over the most recent sessions as the global credit market crisis intensfied. In fact, last week the Dow fell just over 1,874 points, or 18%. The index has lost nearly 22% over the last eight sessions, as panicked investors ditched stocks across the board.
That panic also gripped the global markets, which have seen some brutal selloffs of their own.
"The magnitude of what`s going on is unprecedented and people are frightened," said Robert Philips, senior portfolio strategist at BLB&B Advisors.
Finance ministers from the Group of Seven nations said Friday that exceptional steps were needed to ease the global financial crisis and get money flowing again.
And early Saturday, the G-7 vowed to work together to stem the criris. Later in the day, the International Monetary Fund soundly endorsed the G-7 commiment, with IMF managing director Dominique Strauss-Kahn saying the crisis "had pushed the global financial system to the brink of systemic meltdown."
Wall Street lost roughly $2.4 trillion in market value during the week, according to losses in the Dow Jones Wilshire 5000, the broadest measure of the market.
And investor fear surged to record levels, with the CBOE Volatility (VIX) index, or the VIX, hitting a record just shy of 77 Friday, before closing a bit off those levels.
The Dow Jones industrial average (INDU) ended Friday`s session down just 128 points, after falling as much as 697 points in the morning. The Standard & Poor`s 500 (SPX) index also declined Friday and for eight sessions in a row. The Nasdaq composite (COMP) ended barely higher, following seven down sessions.
Paralyzing fear. Banks have clamped down on capital, with credit markets remaining frozen and several measures of bank nervousness hitting all-time highs. Treasury prices slumped, boosting the corresponding yields as investors no longer bet that government debt was necessarily so much safer than stocks. The dollar recovered versus other major currencies. And oil, gold and other commodities plunged on bets that slowing global demand will hurt oil usage.
"Investors are the most fearful they`ve ever been," said Phil Orlando, chief equity market strategist at Federated Investors.
The heightened volatility that has left investors seasick was evident in Friday`s market. In the first five minutes of trade Friday the Dow plunged 697 points, falling below 7,900 to the lowest point since March 17, 2003. The Nasdaq and S&P also hit more than five-year lows. But stocks recovered abruptly, with the Dow erasing losses. The afternoon saw the Dow make violent swings back and forth, toppling as much as 600 points and rising as much as 322 points.
Stocks have plunged despite a series of efforts on the part of the government to unfreeze the credit markets and get money flowing through the system again.
"Fear is feeding upon itself and nothing the officials have done to this point seems to stem the tide," said Ryan Atkinson, market analyst at Balestra Capital.
Last week, the Fed announced an emergency rate cut, coordinated with banks around the world. The central bank has also pumped billions into the system. But the moves have hardly made a dent in investor sentiment.
"Central banks of the world have been flooding the markets with liquidity, but banks are hoarding cash," Atkinson said. "This is the lynchpin of the entire financial system and as long as this is still going on, the markets will be driven by fear."
...
In reply to:
SENSEX to rally by 2400 pts in 7 days
Posted by : sambala
Wall Street`s 8 brutal days.
Dow plunges 2,400 points, or 22%, as panicked investors run for the exits.
