DOW Breaks 11k

[Ryan Ruck]

Give it time... NYMEX Gasoline Future is around $1.87 a gallon right now.

[Malsua]

Wish you would have said something to the rest of us less-than-savvy-market guys.

Since I really don't know SHIT about it.

When I decide to move back into equities or index funds, I'll mention it and you can decide for yourself.

[Malsua]

At 2.39pm, not looking good....

Rally late perhaps?

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DOW JONES INDUSTRIAL AVERAGE INDEX	DOW JONES INDUSTRIAL AVERAGE INDEX	INDEXDJX	.DJI	8,055.90	-523.29	(-6.10%)
NASDAQ COMPOSITE INDEX	NASDAQ COMPOSITE INDEX	INDEXNASDAQ	.IXIC	1,551.22	-93.90	(-5.71%)
S&P 500 INDEX	S&P 500 INDEX	INDEXSP	.INX	847.02	-62.90	(-6.91%)

[American Patriot]

I predict a positive close.... small, but significant.

It's currently -79.

That means that we lost 800 points today or close to that, and it's come back UP to 0 almost.

If we have a 70 point loss... that's still a good thing. We've bottomed and it will start to settle over the next few days and start to climb again, albeit slowly.

[Malsua]

The problem is...each day, shorts get processed in the last hour or so causing a selloff. Right now it's up...the next 35 minutes should be interesting.

[American Patriot]

That's what I am thinking.

Since you seem to understand this, Mal, why don't you explain to us what is "happening" - and how this stuff all works?

[American Patriot]

+24 atm

[American Patriot]

Margin Call, Gentlemen?
Jesse's Café Américain ^ | 10 October 2008 | Jesse

Posted on Friday, October 10, 2008 1:07:48 PM by ThePythonicCow

This is something going around the trading desks. Suddenly tightening margin credit is a precipitant to artificially steep market declines as those students of the Crash of 1929 will well remember. That is something one does on the upside of a potential asset bubble, not in the decline.

If this is true, then there is an obvious need for the Fed to step in and provide credit relief even if on high rates, moreso than propping up a few banks by buying their worthless assets at above market prices.

Forced margin selling because of arbitrary private bank policies is going to create a major problem in the financial markets, leading to a greater concentration of wealth.



The selling has reached historic proportions. There literally is a "run on the market," as investors worldwide are dumping stocks.

It seems that the major catalyst for this selling is the fact that the newest large banks primarily J. P. Morgan, Goldman Sachs, and possibly Morgan Stanley as well -- have issued massive margin calls to hedge funds and other professional traders who use these banks as prime brokers.

These calls were not issued because of market losses, but more because the banks arbitrarily decided that they wanted their customers to use less leverage. Margin rates as low as 15% for broker dealers were raised to 35%; hedge funds who had been used to operating on high leverage were told that they had to bring accounts up to a much larger percentage of equity.

In this illiquid environment, where all manor of exotic securities literally have no bids, the only place to raise the cash to meet margin calls was to sell stock. That is what really set this market over the edge -- as the first notice of these calls were issued on October 2nd and 3rd.

There was something of a grace period to meet the calls, but funds realized they weren't going to be able to meet them other than by selling stock. There are rumors that the most massive of the calls are due Monday (October 13th). If so, this market could continue to decline through then.

[American Patriot]

+135 atm

[Malsua]

It's pretty simple really, people set floors, price drops below the machines start to sell...until it hits the floor below and then it starts to buy. Shorts are typically sold and processed in the last hour of the day. No one wants to come in and find the market climbed out of a hole in pre-trading, so they liquidate those positions at the end of the day or week.

There is also plain ole profit taken that happens on Fridays. People will sell off near close to realize a profit, this also tends to drive the markets down some at the end of the day.

Today it looks like a rally. People saw 8500s as a buying opportunity and are now buying irrationally hoping for big bid ups.

I don't know that much about the market, just what I've been reading since I've been paying attention to my investments in the last 8 years or so.

[American Patriot]

Dow Jones Industrial Average Chart News 9642.48 10325.38 10322.76 9525.32 240,366,892 -682.9 -6.61% 14198.1 10827.71 0 0 0 0
NASDAQ COMPOSITE Chart News 1796.86 1947.39 1905.01 1777.02 0 -150.53 -7.73% 2861.51 1947.19 0 0 0 0
S&P 500 INDEX Chart News 1019.15 1099.23 1097.56 1007.97 0 -80.08 -7.29% 1576.09 1098.14 0 0 0 0

(From my live spreadsheet)

[Cary]

Can we start a pool as to when Cary will be posting again?

I'm sure we'll see it drop again at some point (DJIA went above 12,400 today), but it may be a while. I know from Anomalies that Cary's opinion is to look for trouble in the 2010-2012 range ... will he be posting on this topic before that timeframe?

-Bryk

Well, the DJIA broke below 8,000 (7882.51) this morning before reversing up late in the day . Looks like an overdue over sold bounce is here. I'm expecting a bounce for two to three months before a lot more pain and tears. And to clear up a point, 2010 to 2012 was when I was expecting a bottom in the financial markets. Trouble has been here for a while now.

[American Patriot]

			Last	Previous Close	High	Low	Volume	Change	% Change	52 Wk High	52 Wk Low
Dow Jones Industrial Average	Chart	News	9642.48	10325.38	10322.76	9525.32	240,366,892	-682.9	-6.61%	14198.1	10827.71
NASDAQ COMPOSITE	Chart	News	1796.86	1947.39	1905.01	1777.02	0	-150.53	-7.73%	2861.51	1947.19
S&P 500 INDEX	Chart	News	1019.15	1099.23	1097.56	1007.97	0	-80.08	-7.29%	1576.09	1098.14

[Malsua]

+310

Was there any "news" about Euro bailouts today?

[American Patriot]

I haven't been at the desk much or paying attention til the last few minutes, I DID hear that there were some riots in England though over bailouts.

Not sure what was happening, why or who all was involved though.

[American Patriot]

It's all over the place. in the negatives again.

[Malsua]

Minor negative for the day. Lots of money is being made on these big swings.

[Malsua]

When I decide to move back into equities or index funds, I'll mention it and you can decide for yourself.

Just thought I'd mention it. I'm pulling 25% out of my guaranteed fund(Money Market) and putting it into small and mid cap.

I consider this a toe back into the tepid pool. The market has pretty much bottomed in a real sense. What I mean by this is that if we have a depression, this isn't going to make a damn bit of difference. It's all going away. If a recovery occurs however, now is a great place to get in. I'm not going all in. I'm still 60% in money market and bonds but if the market takes off due to cheerleading of zero, I want to cash in on it.

If I see sustained upward ticks, I'll move more. Still very cautious but I want to capture the next big upticks. I can't do that in bonds and money market.

Staying away from large cap equities now, but specifically I'm going into these:

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Small Cap Growth (Van Kampen) SIA-RD Summary as of 12/31/2008 Under normal market conditions, the investment option’s investment adviser seeks to achieve the investment objective by investing primarily in common stocks and other equity securities of small companies that the investment adviser believes have above-average potential for capital appreciation. The investment adviser uses a bottom-up disciplined style of investing that emphasizes the analysis of individual stocks rather than economic and market cycles.
Morningstar® Investment Profile (9/30/2008) Prospectus(es) and Other Regulatory Publications	Average Annual Returns One Year -35.78% Three Years -4.25% Five Years 3.83% Ten Years N/A Since Inception -2.62%
Links to prospectus(es) and other regulatory publications will appear only if the investment has a corresponding publication.
Past performance does not guarantee future results. Performance returns include the re-investment of dividends and capital gains distributions. Investment return and principal value will fluctuate so that the value at distribution may be greater or less than the original value. Performance is shown net of expenses, but before any applicable contract or plan charges. Performance information is reported by Morningstar Principia as of 12/31/2008, and is subject to change. Average annual returns show the change in the value of an investment expressed as a percentage on an annual basis.
Inception date August 31, 2006. Prior to inception, performance shown is that of the Van Kampen Small Cap Growth Fund Class A shares, which began operations November 27, 2000. Investments in companies with small or mid market capitalization ('small caps' or 'mid caps') may be subject to special risks given their characteristic narrow markets, limited financial resources, and less liquid stocks, all of which may cause price volatility.

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Sel Mid Cap Gr (Wellington/Turner) SIA-Q Summary as of 12/31/2008 Invests in the common stocks of companies with market capitalizations between $2 and $10 billion. Securities are screened for attractive return versus risk characteristics. The manager believes that disciplined quantitative analysis can select growth stocks which will significantly outperform the overall market over the long term.Investments in companies with small market capitalization ('small caps') may be subject to special risks given their characteristic narrow markets, limited financial resources, and less liquid stocks, all which may cause price volatility.
Morningstar® Investment Profile (9/30/2008) Due Diligence Report (9/30/2008) Prospectus(es) and Other Regulatory Publications	Average Annual Returns One Year -46.85% Three Years -14.69% Five Years -4.21% Ten Years N/A Since Inception -3.72%
Links to prospectus(es) and other regulatory publications will appear only if the investment has a corresponding publication.
Past performance does not guarantee future results. Performance returns include the re-investment of dividends and capital gains distributions. Investment return and principal value will fluctuate so that the value at distribution may be greater or less than the original value. Performance is shown net of expenses, but before any applicable contract or plan charges. Performance information is reported by Morningstar Principia as of 12/31/2008, and is subject to change. Average annual returns show the change in the value of an investment expressed as a percentage on an annual basis.

[Ryan Ruck]

I too am hoping that it has really bottomed out. I've decided to max my 401k contributions to their employer matching maximum. I have a managed 401k and it has actually done moderately well recently.

[Malsua]

I too am hoping that it has really bottomed out. I've decided to max my 401k contributions to their employer matching maximum. I have a managed 401k and it has actually done moderately well recently.

You can't change your investment selections?