HOLY SMOKES : Did i read this right? Dow below 10,000 S&P;1,100 Nasdaq 1500. Is this possible by October?

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[quote author="PANDA" date=1223943870]Bluefire,



How far up do you think this dead cat will bounce in terms of the DOW before it heads south again?



Are we talking 9000 or 10000 here for the DOW? Oops.. we are already past 9000.



This Fake rally in the U.S. Stock Market may be the Last chance for everyone to get out of the stock market if they have not already.</blockquote>


Panda, you're something.



Sometimes you act like a scared cuddly Panda and ask everyone else for advice on his investments.



Then in the next post you act like wise old Panda who has seen it all coming years ago and now tells everyone what they should do.



Which is it? And how do you know this is the "last chance" to exit? For all we know it could be the last chance to enter at these prices. I don't have a personal phoneline to God, so you'll have to enlighten me as to how you know these things. We may drop 5% tomorrow. But another 5% runup is equally possible. 50/50.



I for one am tired of timing these markets daily. I will scale back in, slowly, over months, in company with strong cash flow and no debt.



If you really think this is the great depression, then I hope you have a plan B for retirement, staying in cash (even other currencies) for ten years certainly won't get you there.



Not every stock has to follow the index either - I would focus more on finding the right companies right now than trying to play dice as to if the market will be up or down tomorrow. Even during the great depression, there were strong bull phases:



June 1, 1932 to Sept 7, 1932: 4.40 to 9.31 (gain of +111.6%)

Feb 27, 1933 to July 19, 1933: 5.53 to 12.20 (gain of +120.6%)

Oct 19, 1933 to Feb 4, 1934: 8.61 to 11.82 (gain of +37.3%)

Mar 14, 1935 to Mar 5, 1937: 8.06 to 18.68 (gain of +131.8%)

Mar 31, 1938 to Nov 14, 1938: 8.50 to 13.78 (gain of +62.1%)

Yes stocks went down 90%, but a tactical allocation as stocks rebounded up or down would have certainly have helped things quite a bit.



The Great Depression happens when everyone starts believing in it, stops spending, and puts away all their money in non-productive safe assets (aka. gold). The Great Depression is in our minds and becomes a self-fulfilling prophecy; fear begets fear, and fear freezes the economy. Yes, unpaid debt is the source of all these problems, but running into bunker mode will make things worse for everyone. It doesn't have to be that way. Personally, I'm more interested into how I can help avoid the Great Depression rather than predicting it and seeing how I can profit from it.
 
[quote author="acpme" date=1223948395]hmmm i wonder where today would represent in this chart...



<img src="http://img902.mytextgraphics.com/photolava/2008/10/13/bigchartoct13-4c6mizo8z.jpeg" alt="" /></blockquote>


Thank you for posting that chart. I was going to post one similar to it and offer my 2 cents worth.



After the initial bounce, those that were frightened by the drop feel it is safe to enter the market. They buy right at the peak of the bounce. They then go slowly underwater and sell one-by-one into the slow decline. This is the general public getting burned twice. When we retest the low on low volume, the enduring bottom will be put in place. This is where the smart money starts slowly accumulating positions.
 
[quote author="IrvineRenter" date=1223960786]After the initial bounce, those that were frightened by the drop feel it is safe to enter the market. They buy right at the peak of the bounce. They then go slowly underwater and sell one-by-one into the slow decline. This is the general public getting burned twice. When we retest the low on low volume, the enduring bottom will be put in place. This is where the smart money starts slowly accumulating positions.</blockquote>


It doesn't appear from any charts I pull up that last week had the kind of climactic volume depicted in this chart... Seems like volume was up, but maybe only twice that of average.
 
ipo, that chart isnt specific to the recent dow or spx. its a general bear market chart. sorry if that confused anyone else.
 
Man I was getting beat to death this morning, gained back some....I'm hoping this market goes south fast. Been buying more puts to cost average...sigh...
 
[quote author="blackvault_cm" date=1224027712]Man I was getting beat to death this morning, gained back some....I'm hoping this market goes south fast. Been buying more puts to cost average...sigh...</blockquote>


I hope you are not early. The market is hitting resistance at the 10-day SMA. If it rises up to the 20-day SMA before reversing, you will be crushed.
 
[quote author="blackvault_cm" date=1224027712]Man I was getting beat to death this morning, gained back some....I'm hoping this market goes south fast. Been buying more puts to cost average...sigh...</blockquote>


As I said yesterday, you may be a little early with your put purchases. We may see some more upward action before the week is out. This is what we have seen for the last couple of months with options ex. week, and it seems even more likely for this particular week with the dramatic move down we have seen. Buying November puts towards the end of this week may be the better play IMO.
 
I did both. I placed about 6K worth of puts ending this week, and added about 9K worth of november puts this morning. Timing might be off, at the same time DOW can't break through the daily resistances of 9500 or 9400...double top has formed twice and I look to see it drop anytime...but thats just technical...



If i'm wrong there goes 15K or a new Scion.
 
[quote author="IrvineRenter" date=1224031183][quote author="blackvault_cm" date=1224027712]Man I was getting beat to death this morning, gained back some....I'm hoping this market goes south fast. Been buying more puts to cost average...sigh...</blockquote>


I hope you are not early. The market is hitting resistance at the 10-day SMA. If it rises up to the 20-day SMA before reversing, you will be crushed.</blockquote>


Yup. Crushed is actually quite nice. If that happens, I would expect annihilated, but I'll take crushed ;)
 
Dow just broke through 9300 daily resistance (double bottom it formed earlier)...could be good.



The next big support is 9000, so we can see a 300 point drop instantly if it doesn't create a support level fast.
 
[quote author="acpme" date=1224025108]ipo, that chart isnt specific to the recent dow or spx. its a general bear market chart. sorry if that confused anyone else.</blockquote>


I realize that acpme. This general chart shows a significant volume increase during capitulation and before the big bear trap. Our markets last week don't appear to have shown the same type of classic volume increase.
 
[quote author="ipoplaya" date=1224038676][quote author="acpme" date=1224025108]ipo, that chart isnt specific to the recent dow or spx. its a general bear market chart. sorry if that confused anyone else.</blockquote>


I realize that acpme. This general chart shows a significant volume increase during capitulation and before the big bear trap. Our markets last week don't appear to have shown the same type of classic volume increase.</blockquote>


hmmm that fascinating actually... the anecdotal evidence would suggest otherwise. it was widely known that many actively managed funds have been winding down their gross exposures. the front pg of the wsj today had a piece about hedge funds like SAC and paulson going to as much as 50% cash. in total about $400 billion of hedge fund capital alone pulled off the table (although it didn't mention the timing).



surprised the volume data over the past week hasn't reflected that. interesting... any theories?
 
[quote author="acpme" date=1224045408][quote author="ipoplaya" date=1224038676][quote author="acpme" date=1224025108]ipo, that chart isnt specific to the recent dow or spx. its a general bear market chart. sorry if that confused anyone else.</blockquote>


I realize that acpme. This general chart shows a significant volume increase during capitulation and before the big bear trap. Our markets last week don't appear to have shown the same type of classic volume increase.</blockquote>


hmmm that fascinating actually... the anecdotal evidence would suggest otherwise. it was widely known that many actively managed funds have been winding down their gross exposures. the front pg of the wsj today had a piece about hedge funds like SAC and paulson going to as much as 50% cash. in total about $400 billion of hedge fund capital alone pulled off the table (although it didn't mention the timing).



surprised the volume data over the past week hasn't reflected that. interesting... any theories?</blockquote>


I don't think it is the data that doesn't reflect it, it is the way the chart was made.



Here is the Dow for the last year. The volume for the preceding four months before the drop looks like it was averaging 200mil, and it spiked to over 600mil on the drop.



http://img108.mytextgraphics.com/photolava/2008/10/14/dow1014-4c73abiw9.jpeg



Now here is the Dow from 11/00-11/01. Notice the spike of over 600mil shares on the drop day and how familiar it looks.



http://img108.mytextgraphics.com/photolava/2008/10/14/dow0001-4c73djfb1.jpeg



Now here is the year after. Again a nearly 600mil shares traded day on drop day.



http://img107.mytextgraphics.com/photolava/2008/10/14/dow0102-4c73evvyd.jpeg



If this is any indicator of what is to come, then we could have a nice little mid-term rally, followed by another few gut wrenching blows.
 
[quote author="acpme" date=1224045408][quote author="ipoplaya" date=1224038676][quote author="acpme" date=1224025108]ipo, that chart isnt specific to the recent dow or spx. its a general bear market chart. sorry if that confused anyone else.</blockquote>


I realize that acpme. This general chart shows a significant volume increase during capitulation and before the big bear trap. Our markets last week don't appear to have shown the same type of classic volume increase.</blockquote>


hmmm that fascinating actually... the anecdotal evidence would suggest otherwise. it was widely known that many actively managed funds have been winding down their gross exposures. the front pg of the wsj today had a piece about hedge funds like SAC and paulson going to as much as 50% cash. in total about $400 billion of hedge fund capital alone pulled off the table (although it didn't mention the timing).



surprised the volume data over the past week hasn't reflected that. interesting... any theories?</blockquote>


Based on what Graph posted, it appears in recent history that panic selling only sends Dow volume up by 2-3X. The general chart you posted has a much greater magnitude, eyeballing it, looks to be more around 4-6X at the panic sell point... Maybe earlier such instances of this market behavior had different overall market dynamics such that those crashes had a greater share of volume vs. trend.
 
[quote author="blackvault_cm" date=1224038990]Well I bent over and took it hard....how enjoyable.</blockquote>


I made my $47 in CD interest again today :)
 
[quote author="ipoplaya" date=1224052454]



Based on what Graph posted, it appears in recent history that panic selling only sends Dow volume up by 2-3X. The general chart you posted has a much greater magnitude, eyeballing it, looks to be more around 4-6X at the panic sell point... Maybe earlier such instances of this market behavior had different overall market dynamics such that those crashes had a greater share of volume vs. trend.</blockquote>


i digged up where i originally found that chart and turns out its from... the future! dum dum DUUUUM!
 
Yeah maybe I should have put money in CDs. $47 is a nice gain compared to my paper loss today.



Anyway, here is some useless stats I compiled while watching Fringe.



<strong>1929 Crash </strong>

299 230 -23.0%

230 274 18.9%

274 232 -15.1%

<strong>

1987 Crash </strong>

2,508 1,739 -30.7%

1,739 2,028 16.6%

2,028 1,794 -11.5%



<strong>2000 Crash </strong>

9,275 7,702 -17.0%

7,702 8,680 12.7%

8,680 8,043 -7.3%



<strong>2002 Crash</strong>

10,353 8,019 -22.5%

8,019 8,872 10.6%

8,872 7,528 -15.1%



<strong>2008 Crash</strong>

10,851 8,451 -22.1%

8,451 9,310 10.2%

9,310 <strong>8,291** -12.3%**</strong>





Avg 1st Drop -23.1%

Avg 2nd Rise 13.8%

Avg 3rd Drop -12.3%



This is based on the quick down, up, and down points in the famous crashes. They are pretty much all short term as most of these happened within days. For example the 1929 crash it crashed for 4 days, went up 2, then down 2. (2008 is very similar)



**Estimate based on the averages. (9,310 is where we are at now, 8,291 is estimate)
 
It seems like there are alot of folks talking about bargain prices and great values. Doesn't sound like a bottom to me. I would guess the main topic at the bottom will be how risky it is to invest in stocks, not how someone may miss the bus if they keep waiting, or how you don't want to sell at the bottom.
 
[quote author="awgee" date=1224097556]It seems like there are alot of folks talking about bargain prices and great values. Doesn't sound like a bottom to me. I would guess the main topic at the bottom will be how risky it is to invest in stocks, not how someone may miss the bus if they keep waiting, or how you don't want to sell at the bottom.</blockquote>


Just like in our housing market, the first stage of the bear market decline is greeted with denial and optimism. When this market grinds lower for 6-9 months, then nobody will be talking about bargains anymore.
 
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