Uh-Oh
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Looks like we are going to get fluctuated again . . .
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Thursday, March 01, 2007 | 09:29 AM | Permalink
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OK Barry, a full bore correction has arrived (as you have predicted). Now, how far down does it go (10%) and as a long-term INVESTOR (not trader), when do I put my 20% that isn't long the market to work?
Where are the support levels on each of the three indicies?
TIA
Posted by: Jdamon | Mar 1, 2007 9:52:55 AM
IMHO, fear has not set in just yet. Indian traders saw this pattern last year in the Bombay Sensex index:
May 10th 2006 (high): 12,624
June 13th 2006 (low): 9,387
After the summer lows, the markets rose around the world. Bombay Sensex high::
Feb 8, 2007 (high): 14,687
The big question is do we take out last summer's lows in markets around the world. That would be an event. This is so far a pertubation.
Posted by: Mr. Beach | Mar 1, 2007 10:00:09 AM
Nothing to worry about -- its just another Dow Jones glitch
Posted by: Jim Cramer | Mar 1, 2007 10:07:14 AM
Dude, if you don't think there is some fear, try losing $30g in one day. That will throw some fear into you quick.
That being said, looks like buyers are stepping up to the plate after the initial sell-off. Hopefully they can keep the market in some sort of shape.
Definite jitters amongst the investing crowd today. When you lose 3 months of gains overnight, I would say that got some peoples attention.
Posted by: Jdamon | Mar 1, 2007 10:08:12 AM
Barry, By any wild chance have you read my blog? I used the exact same headline (Uh-Oh) on Tuesday. I'd be amazed if you've seen it.
Posted by: Tony Winston | Mar 1, 2007 10:19:47 AM
I had a bunch of Canadian dollars I needed to exchange so I went to the currency exchange window at the local bank.
Short line... just one guy in front of me...
He was an Asian guy who was trying to exchange yen for dollars and he was a little agitated.
He asked the teller, "why it change? yesterday I get two hunat dolla fo yen - today I get hunat eighty? Why it change?"
The teller says, "fluctuations".
The Asian guy says, "fluc you white guys too!"
Posted by: asian | Mar 1, 2007 10:31:41 AM
i love it when the CNBC talking heads and guests repeat their mantra "nothing in the economy has changed", as if markets have much if any day to day correlation to economies. markets are fueled by liquidity, or the perception thereof, and can take on a life of their own, independent of any "objective" correlations. but in fact the economy is in objectively worse shape today than it was last September, before this baby rocketed up 14%. so why dont we take out just that much, then poke our little heads up and see how the world looks.
Posted by: scorpio | Mar 1, 2007 10:43:43 AM
Only one way to settle this......Chinese Downhill.
Posted by: John | Mar 1, 2007 10:44:00 AM
NYSE imposes trading curbs as stocks fall
The New York Stock Exchange said on Thursday it instituted downside trading curbs as U.S. stocks fell sharply in early trading. ...
The trading curbs require that all program buying of S&P 500 stocks must be on an up-tick.
http://today.reuters.com/news/articlenews.aspx?type=businessNews&storyid=2007-03-01T150038Z_01_N01358739_RTRUKOC_0_US-MARKETS-NYSE-CURBS.xml&src=rss&rpc=23
What are the ramifications of this? Institutional investors would be unable to exit out of positions during an equity index free-fall?
Posted by: Suresh | Mar 1, 2007 10:49:51 AM
Mr Beach...to say that there is/was no fear is laughable. Take a peek at the VIX or VXO (aka: the FEAR index). Take a peek at the put call ratios...or the bets being made in the inverse ETFs. It is not only fear but "agressive confidence" on the part of the bears. That has not ended well for those making that bet in the past.
Posted by: Fred | Mar 1, 2007 10:57:10 AM
...because all those nice folks who were telling you to be calm and hold on yesterday are now pulling the rug out from under you ...
Posted by: Bob A | Mar 1, 2007 10:59:18 AM
Why are the curbs in place with such a relatively small move? I thought it tool like a 500 point move to create the curbs..
Also, it'd be interesting to know how these curbs work anyway.
Posted by: Eddie | Mar 1, 2007 11:00:20 AM
Suresh, not sure about that Reuters article -- it's no longer available (maybe the reporter was getting it ready based on the opening dive and it got posted erroneously for a period).
Eddie, more info on the curbs in Barry's Tuesday's post:
http://bigpicture.typepad.com/comments/2007/02/nyse_collars_tr.html
Posted by: wyler | Mar 1, 2007 11:30:38 AM
Wyler,
From Reuters:
"The New York Stock Exchange said on Thursday it removed downside trading curbs as U.S. stocks pared early losses. The curbs were instituted as stocks plummeted after the opening bell."
http://today.reuters.co.uk/news/articlebusiness.aspx?type=businessNews&storyID=2007-03-01T153728Z_01_N01358739_RTRUKOC_0_UK-MARKETS-NYSE-CURBS.xml
Hmmm, well, that was a quick turn of events.
Posted by: Suresh | Mar 1, 2007 11:48:47 AM
TIA asks the right qustion - correction of 10% is ever possible, as well a rally of 10%. An investor does not care about it. Even 15% in the major indexes is not very scary; just sleep it over...
For ones who have bouth early (and were not irritated by worries all the run up and have hold the stocks) current downmove is nothing.
Posted by: Saviano | Mar 1, 2007 12:01:03 PM
With all due respect, those suggesting there is real Fear in the markets must be young-uns.
This is nothing. Fear starts to build when 10% of your portfolio is wiped out within minutes.
Fear of additional losses starts panic selling. And then the margin calls begin.
Or let me try a sailing analogy. Swells that knock your boat up and down are commonplace. Fear begins to develop when you find yourself in swells so deep that the horizon disappears. It has happened to me and it sucks.
I suppose it is the sign of the times that a few percentage points down and everyone is talking doom and gloom. This is nothing.
Posted by: Mr. Beach | Mar 1, 2007 12:16:57 PM
The pre-market futures and opening round was a capitulative puke job. What other than fear would create that huge towel throwing?
I respect your opinion, but my 27 years in front of this turret has me disagreeing with you. It can, of course drop more. But the complacency has reversed to fear on any metric that I'm aware of (that is measurable). If you can provide evidence to the contrary, I'm eager to see it.
TIA.
Posted by: Fred | Mar 1, 2007 12:25:16 PM
What I'm saying is that if you don't think there was fear when the Dow was down 500+ points, you are crazy.
Also, the fact that so many still have fresh in their minds the absolute wipe-out they got in 2000 - 2002 when the Naz lost 80+% of its value, exacerbates that fear. I still know people who refuse to invest in the market because they lost half of what they owned when the tech bubble burst.
The question is do we have a bubble in stocks right now? I don't see it, but some (like Barry?) seem to.
Posted by: Jdamon | Mar 1, 2007 12:27:45 PM
Also, when people talk about a 16% rise in stocks since July '06, they need to not leave out the fact that from May to June we had darn near a 10% correction. Net, net, the market isn't really "flying high" over the last 4 years of this "bull" market.
What is the avg. annual gain for the S&P since 2003? I bet it is less than it's historical avg. Bull market my a$$.
Posted by: Jdamon | Mar 1, 2007 12:30:59 PM
Why Kudlow's analysis is relevant is beyond me. His claim that Bush's lower tax rates are increasing tax revenues and decreasing the deficit are so transparently ridiculous, I'm surprised his degrees haven't been revoked. deLong will likely cite him again in the contest for the world's stupidest person.
Posted by: Lawyer | Mar 1, 2007 12:41:58 PM
Finally...
...volatility!!!
For a while there, I thought I was going to have to convert all my trading accounts into mutual fund accounts and become a real estate broker to pass the time.
Posted by: Michael C. | Mar 1, 2007 1:22:00 PM
JDamon, it doesn't take a bubble for stocks to sell off. Even if the bullish "goldilocks" soft landing scenario plays out, market growth from here doesn't look good.
Posted by: Josh | Mar 1, 2007 2:24:57 PM
One day might arrive when the US Government, in its paternalistic, big government, big brother style might enforce a law banning US citizens to invest in the stock market no more than an x% of their income. This is already happening. Fortunately, to the US Government I am a non-resident foreign alien (some kind of sci-fi character). This means I invest in hedge funds and other alternative investments without having to be an "accredited investor". US citizens are not allowed to invest their own money where they please unless they have a couple of million dollars or so. In order to be consequent with the argument of protecting US citizens from "risky" investments, I believe the US Government should enact and enforce another law: To buy a house you have to be an "accredited investor".
Ernst
Posted by: Ernst | Mar 1, 2007 2:29:44 PM
The fear derives from knowing what is coming, and is this market bump the pre cursor to the big crash
If you're a fan of LewRockWell.com, and the gold standard crowd (like me), I would say there is a lot to fear.
Fiat Currency anyone??
That's why I opened up an EverBank (Foreign Currency)account.
Posted by: Poncho | Mar 1, 2007 2:30:17 PM
"gold standard"
Ah, yes, fiat with a smile.
Posted by: Cherry | Mar 1, 2007 2:40:27 PM
