Market drops 3 percent on profit jitters, oil record

Market drops 3 percent on profit jitters, oil record

news.yahoo.com

NEW YORK (Reuters) - Stocks plunged on Thursday, with the Dow sliding about 360 points to a 21-month low as oil hit a record and Wall Street powerhouse Goldman Sachs urged investors to sell bank and automaker shares, escalating concern about the outlook for profits.
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Oil surged above $140 a barrel in New York trading, compounding fears that soaring inflation will hamper a global economy already on the ropes.

(visit the link for the full news article)

This is troubling... I have lost a lot! Who else here? what do we do now? Any good ideas welcome here.

news.yahoo.com
(visit the link for the full news article)

The post here could be correct. What do you think? Any financial expertise here?

www.abovetopsecret.com...

forgot link

guz

[edit on 26-6-2008 by Guzzeppi]

Is there nobody vested here? Nobody that has a picture of what's to come? let me here your thoughts ATS.

From what I can tell we are now in a huge wave 3 of a major downtrend. If you don't know what that means look up "Elliott Wave". Maybe you can find something by looking up "Dow Elliott Wave Count". It's not pretty. The non-technical wording would be "get out now and wait for a bottom somewhere near 9,000".

I'm not vested. Personally, I would never touch the stock market. It's just a big redistribution of wealth scheme.

Originally posted by Cons Piracy
From what I can tell we are now in a huge wave 3 of a major downtrend. If you don't know what that means look up "Elliott Wave".

Here is what I found:

Wave 3: Wave three is usually the largest and most powerful wave in a trend (although some research suggests that in commodity markets, wave five is the largest). The news is now positive and fundamental analysts start to raise earnings estimates. Prices rise quickly, corrections are short-lived and shallow. Anyone looking to "get in on a pullback" will likely miss the boat. As wave three starts, the news is probably still bearish, and most market players remain negative; but by wave three's midpoint, "the crowd" will often join the new bullish trend. Wave three often extends wave one by a ratio of 1.618:1.

Kind of scary! Thanks for the info Cons. how long do you think this will last before there is some kind of equalization?

That would be pure speculation. The markets bounce around so putting a date on it is iffy. I don't do Elliott Wave analysis on the Dow. I just keep up with tidbits here and there so I know what the Carry Trade is going to do.

The site that I heard about "Wave 3" was www.urbansurvival.com...

If you have long term charts for Dow you might try Fibonacci Arcs or Fibonacci Timezones. I haven't studied those too much myself but they are supposed to give an idea of how long a particular move will be. Might want to do some quick study on those.

Remember though that wave 3 isn't the end. There will be a corrective wave 4 going up and then another wave 5 going down.

From the brief bit I read on that site, several people are seeing a wave 3 of wave 3 starting about now. Waves within waves. You might want to look through the archives and see if you can find that information. Sorry, I don't really have the initiative to do it.

Good luck. It looks like it might be time to sell the dollar against the other majors again. The FED is pretty well sidelined for awhile. They need to let the rate cuts work their way through the market. And then they need to raise rates again. But that could be 6 months out.

There's no real sign of this letting up anytime soon. If they can stop some of the oil speculating that might bring oil down which would be a much needed boost to the economy. But the longer that oil stays where it is, the deeper the implications and the farther out an "equalization" will be.

Edit: Disclaimer: This is not financial advice and should not be taken as such. This is mere speculation and idle chatter of market dynamics.

[edit on 26-6-2008 by Cons Piracy]

Well this particular school of study is far outside of my intrests but my comment would be that the study of trends and making an action based upon them could give a real world lesson in the difference between what is likely and what is actual.

That said, it may be nothing more than FUD, but I did hear that we are currently on pace to have the worst June on record since the Great Depression. The difference will depend on the trend of end of month rebound. If we get the traditional upswing then we beat the old record, if we don't then "dun, dun, dun" more negative speculation and fear as news outlets report it.

This is just the beginning of an inflationary depression. More banks will collapse and be bailed out with funny money (fiat currency). This will fuel the inflation that is driving oil and commodities. The world will have to decide if our Reserve Currency can be tolerated any longer as the Inflation that comes with it destroys their economies.

The Derivatives market, which stands at 1 Quadrillion Dollars, will begin to unwind as the Real Estate Correction and Banking Collapse progresses. Inflation will exacerbate the situation. 1 Quadrillion in Debt gone bad equals worldwide hyperinflationary depression.

Originally posted by Guzzeppi
What do you think? Any financial expertise here?

On ATS, all your ever going to hear is constant economic doom and gloom. It doesn't matter what the circumstance is, most of the active ATS posters are constantly hoping for the next economic apocalypse. We could be going up 500 points a day and people would still be posting on here declaring that a depression is just around the corner. Just for fun I once went into the ATS archives and looked at some economic threads. I could not find one where the consensus was not total and complete economic apocalypse - even during periods where the years preceding such posts were an economic boon. It is true that even a broken clock is right twice a day, so the desire/hope/prayers of most ATS members for economic catastrophe will eventually come true. We have to hit economic doom eventually, after all.

The truth of whats currently going on? The economy is cyclical, and every 8-10 years or so we go through this. People who enjoy over-reacting freak out and predict the next depression, we go down a bit, then we go back up. The same thing happened 8 years ago.

The time for making a profit off of the economic doom and gloom sheep is quickly drawing to a close. The media is urging the public at large into a recession/were all doomed mindset, so all the money is shifting towards gold/oil. Pretty soon the commodity bubble is going to burst when the rest of the sheep flock into those sectors.

In about 6 months to a year we should bottom out as the media continues to fuel the doom mindset - by then, people will be selling at huge losses, and I'll be buying from them.

[edit on 26-6-2008 by ALightinDarkness]

reply to post by ALightinDarkness


Aw, Brother, does this mean you will not be spectating my debate:

www.abovetopsecret.com...



This cycle is interesting, I have noticed it of course but never knew there was a name and a science behind it..

From what I have read on it, it in no way predicts the severity of the recession, but rather only depicts the combined thought process in which traders as a whole deal with a recession economy.. essentially it only touches on trading habits and nothing more.

The cause and effect of the current market situation is simply then not represented by this method.

Rockpuck: I shall definitely be watching, thanks for linking to it! By the way, how do we know your not in the masonic cabal to bring the economy to its knees? Maybe you can let us lower level porch masons in on it - share the wealth!

Don't get me wrong, the research indicates a recession, which has been predicted for this period since about 2004. But I think the depth and length of such inevitable economic swings are impacted by the population's mood. If the mass media continues to pump up massive doom and gloom and it sets in, it can make things worse than they really are.

I am however confident that things will go back up...in 2020, we'll see this all over again. The next recession will be looming, and the doom and gloomers will be predicting that the end is nigh...again. As happened in the early 2000s, 1970s, early 1980s, etc.

[edit on 26-6-2008 by ALightinDarkness]

Originally posted by Guzzeppi


This is troubling... I have lost a lot! Who else here? what do we do now? Any good ideas welcome here.

news.yahoo.com
(visit the link for the full news article)

Oil is about to have a massive sell off, buy the DUG...if you'll note, the DUG is an oil ultra short that was up today despite an oil record high...when you have a divergence like that, the dumb money is in oil...which means they are about to get...raped?

Originally posted by HimWhoHathAnEar
This is just the beginning of an inflationary depression. More banks will collapse and be bailed out with funny money (fiat currency). This will fuel the inflation that is driving oil and commodities. The world will have to decide if our Reserve Currency can be tolerated any longer as the Inflation that comes with it destroys their economies.

The Derivatives market, which stands at 1 Quadrillion Dollars, will begin to unwind as the Real Estate Correction and Banking Collapse progresses. Inflation will exacerbate the situation. 1 Quadrillion in Debt gone bad equals worldwide hyperinflationary depression.

If there were a massive unwind of derivatives like you're stating, there would be deflation, not inflation. Inflationary Depressions basically don't occur, most all depressions occur because of a lack of capital, read your history books.

reply to post by yellowcard


Go tell that to Germany. They experienced what inflation does to a countries economy. Or maybe go and explain it to Zimbabwe or Vietnam, they're experiencing it RIGHT NOW!
www.sjsu.edu...

If the derivatives were allowed to collapse then we would see them Deflate. As per the Bear Stearns debacle, the Banks that hold this toxic waste will NOT be allowed to fail. The FED will print the money necessary to shore them up. That's called Inflation.

Originally posted by HimWhoHathAnEar
reply to post by yellowcard

 

Go tell that to Germany. They experienced what inflation does to a countries economy. Or maybe go and explain it to Zimbabwe or Vietnam, they're experiencing it RIGHT NOW!
www.sjsu.edu...

If the derivatives were allowed to collapse then we would see them Deflate. As per the Bear Stearns debacle, the Banks that hold this toxic waste will NOT be allowed to fail. The FED will print the money necessary to shore them up. That's called Inflation.

Inflation is "too much money chasing too few goods"- Milton Friedman; I agree that inflation is high, but in Vietnam and Zimbabwe they have no banking infrastructure and have a horrible political turmoil...which weighs on the FIAT currencies. Germany came out of the Great Depression well before America did, America and France were the last two countries to come out of the Great Depression in the western world...and many economists in Chicago school attribute this to the tight money supply in both countries, all countries that voided the gold standard during the Great Depression period either weren't hit as hard as other countries or didn't suffer from it at all. Anyhow, inflationary depressions very rarely happen, at least not when you have the proper infrastructure. What we view as "inflation" with the Fed supporting the banks is really just "reflation"...basically trying to slow the deflation of assets. The consequences are higher energy and food prices...but from economists...who I don't agree with, because I feel they are very Keynesian, Housing is a bigger percentage of GDP than energy and food. Again, with the proper infrastructure, inflationary depressions don't occur. Without the proper infrastructure is can occur, but it's normally a result of political instability...which weighs on the FIAT currencies that country may have...which causes inflation, more so than the actual printing of too much money.

[edit on 27-6-2008 by yellowcard]

[edit on 27-6-2008 by yellowcard]

I would posit that politics have been involved in creating the debt that we can't pay. Like current wars on 'no one in particular' and entitlement programs running out to 60 some trillion. Not to mention the 10 trillion we already owe with interest.

There is simply no way to pay our debts without printing money. The banking problem with derivatives only exacerbates that situation. Let the banks fail, that would be Capitalism. You make bad decisions, you FAIL!

Originally posted by Guzzeppi
Is there nobody vested here? Nobody that has a picture of what's to come? let me here your thoughts ATS.

i'm very modestly invested...
and the 13 corps i have stock in was not through a broker that charges unreal fees--- i start a company sponsered account in which i buy at least 1 share of the company stock, add voluntary investments for as little as $50, and keep the account known as a DRIP =Dividend ReInvestmewnt Plan on slow growth for a long period of time (11 to 10 years for all 13 DRIPs)

the potential beauty of his type of plan is that the quarterly dividends used to buy stocks every 3 months will buy even more shares in these downturns... If and only If the corporation continues to pay out dividends.

I'm foutunate to not have started any 'financial sector' DRIP accounts,
which are falling like dominoes, and decreasing their dividend payouts by 50% in some cases.

also my modest ROTH Account was converted into a Gold & Prescious Metal Fund back on 6 October 2000 (some 5 days after Scudder launched that fund).


What do i expect--- that the markets will continue to decline to rational valuations... the over inflated Stock prices, which were averaging 15X even 60X earnings, were that high because of the easy credit and other manipulations -> and 90percent of that action is gone for the forseeable future.
What i expect--- is more DeFlation as money and credit goes poof for the middle class as home equity goes poof, as overpriced gas guzzlers get put-to-pasture as they are too costly to operate and there are no buyers... the deflation and job contraction will make many get into lawlessness as a way of life. many of the Boomers will actually go-out-with-a-bang !


but there is an assortment of modern day 'Unsinkable Molly Bown's, out there !

The truth of whats currently going on? The economy is cyclical, and every 8-10 years or so we go through this. People who enjoy over-reacting freak out and predict the next depression, we go down a bit, then we go back up. The same thing happened 8 years ago.

reply to post by ALightinDarkness

The BIS, the ultimate bank of central bankers, pointed to a confluence a worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system.

www.telegraph.co.uk.../money/2007/06/25/cncredit125.xml

The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.

www.telegraph.co.uk.../money/2008/06/18/cnrbs118.xml&ref=patrick.net

The point of maximum stress could occur in coming months if the ECB carries out the threat this month by Jean-Claude Trichet to raise rates. It will be worse yet - for Europe - if the Fed backs away from expected tightening. "This could trigger another 'catastrophic' event," warned Morgan Stanley.

www.telegraph.co.uk.../money/2008/06/16/bcnecb116.xml

June 26 (Bloomberg) -- U.S. stocks tumbled, sending the Dow Jones Industrial Average to its worst June since the Great Depression, as record oil prices, credit-market writedowns and a slowing economy threatened to extend a yearlong profit slump.

www.bloomberg.com...

AS HOUSE prices in America continue their rapid descent, market-watchers are having to cast back ever further for gloomy comparisons. The latest S&P/Case-Shiller national house-price index, published this week, showed a slump of 14.1% in the year to the first quarter, the worst since the index began 20 years ago. Now Robert Shiller, an economist at Yale University and co-inventor of the index, has compiled a version that stretches back over a century. This shows that the latest fall in nominal prices is already much bigger than the 10.5% drop in 1932, the worst point of the Depression. And things are even worse than they look. In the deflationary 1930s house prices declined less in real terms. Today inflation is running at a brisk pace, so property prices have fallen by a staggering 18% in real terms over the past year.

www.economist.com...


So it's all just ATS'ers hugh? I think you're being willfully ignorant of what is transpiring. Good luck with that!

Originally posted by HimWhoHathAnEar
So it's all just ATS'ers hugh? I think you're being willfully ignorant of what is transpiring. Good luck with that!

And this is why you should read my post. I have said - and continue to say - that the mass media is in large part behind this. ATS loves to bash the media but most of them buy into it - when it fits doom and gloom.

I'll stick with the economists and the peer reviewed research, not pumped up doom and gloom. I think the people blindly believing in doom are the ones that are quite ignorant.

You have fun though. I'm sure in 2020, we'll hear this all over again. It'll be time to predict the next round of utter doom. I prefer to deny all ignorance, I'm not going to embrace it just because it spreads propaganda I want to believe in.