Dow Jones closes below 8,000

maybe tomorrow the stock market will rebound and all who OWN stock will rich. lol

Grambler, thank you for injecting such much-needed sense into this thread. Those who see this pre-planned crash as something that one party is somehow not responsible for should buy stock in Kool-Aid.

The Hegelian Dialectic is synthesizing...

European and australian markets took a hit too. Look at the ASX All Ords almost down to 3000 from a healthy 8500 a year ago.

I agree. THe market has been overinflated since the Dot Com crap. Its about time we came back to reality. Look at gas prices now. $1.67 in my city. Prices on store shelves will have to start dropping as well.
These will be interesting times and although I don't think its the end of the US by a long shot, it is a much needed correction.

8000 DJIA/825 S&P are indeed MAJOR support levels. This is the first closing below these levels since 2003; we hit intraday lows below those numbers, but the closing numbers kept sentiment as stable as it can get in this environment.

Don't be surprised to see us above the support numbers again soon. It may be tomorrow, it may be a month from now, but don't expect the markets to go straight down from here. We'll see a rally or three above these levels, but now that the proverbial seal's been broken, there stands a very good chance that we're going lower in the long run.

Of more interest to watch right now are the yields on the 10yr T's and 13wk T's. Flight to safety. The stock markets are such a lagging indicator right now that one shouldn't look only at them to gauge where we're going; that shows where we've been at this point.




While lower food prices are good on the pocketbook right now, a huge drop is, in the long term, not something we want to see. That's when deflation will hit Main Street full-force, and all the fun that comes with deflation will follow.

[edit on 11/19/2008 by anachryon]

reply to post by anachryon

---

Deflation is bad... especially when you have a big debt like the USA... But I'm sure that if we have deflation, they'll do whatever they can to bring us hyperinflation to pay the debt... if the bailout doesn't do it on it's own.

And could you explain the thing about the Treasury bills showing what the future will look like?

Very true that this is a possibility. The only problem is that then people find out their true value and worth. What people don't understand is that they are paid too much for what they do. We live in luxury, face it even a poor person lives good in the US. People are going to have to live with less income and less entertainment. Gone will be the days of charging up the credit card for over priced name brand clothes and electronic devices. Time to wake up people it is about to get ugly.

reply to post by jsobecky

---

BUY GOLD

it's going to be your own real asset after toilet paper is worth more than the USD

scratch that BUY FOOD
you can't eat gold

reply to post by jsobecky

---

This article is not accurate. The Dow spent time below 8000 in 2001, 2002, and 2003. Things are certainly not at their brightest but let’s try to keep things in perspective. The market always moves in proportion to past moves. We are correcting the latest cycle’s gains and will most likely see a bottom at around 6500.

Things may get worse before things get better. I believe that we need to take the economic downturn as an opportunity to become more self sufficient, to realize that despite what those persuasive advertisements tell us we can not buy happiness, and to avoid losing our composure and relinquishing what’s left of a "free" market.

reply to post by Grambler

---

THANK YOU for injecting a bit of sanity into the thread.

---

Oh well, no big loss there. When it comes to domestic "swill", Miller has always been the better choice. The only thing Bush & Bud are good for is college kids (specifically, those who don't actually like beer) getting in their binge drinking on the weekends.

Personally, I'm a bit tired of large corps. crying about U.S. tax rates. We've got so many legal loopholes that many are not actually paying that much more here. I'm all for lowering corporate tax rates as long as we close up the copious amount of loopholes first, but it's when those start closing that we'll really see them start to complain.

Exactly. Deflation is a Very Bad Thing for entities carrying heavy debt. They've been trying to inflate us out of the deflationary pressures for, oh, about 9 months now. Stimulus checks, anyone?

T Bills, as I'm sure you know, are considered the very safest means to invest money. They're a guaranteed return as long as the US Government is still in business. As T Bills are such a safe investment, the yields on them are lower than other investment avenues (stocks, etc) - low risk = low return.

The more people who want to buy T Bills, the lower the yield. Conversely, the less demand there is for them, the higher the yields (to attract more investors). When other avenues such as stocks, munis, whatever, are in trouble, there's a "flight to safety" into T Bills.

What does a flight to safety look like?
Well, it looks exactly like this. That's the chart for 13 week T Bills yield going back to 1960. The lower the yield, the bigger the flight to safety. You can lend the Treasury your money for 13 weeks for an APY of, currently, .065% That's .065% per YEAR. Investors are effectively lending their money to the Treasury for free.

10 year T Bills?
Here ya go. You give the Treasury your money for 10 years and you'll get back 3.391% APY.

What does it tell you about the future?
Volatile markets like stocks are out for at least 3 months. Even otherwise conservative markets like munis and such are too risky, so they're out for at least 3 months. Banks are too risky, even though a short term CD would have a higher yield; those are out for 3 months.

The "crisis" is far from over, and in fact the market here tells us it's expected to get much worse.

And when the truth comes out that the US treasury bonds are worth junk instead of AAA? The US is bankrupt? Or it's just impossible to happen because those who declare this, like Bershire are gonna have a contract on their head... or it's planned.

No?

If our bonds/T's ever get to the point that they're viewed as junk, we're pretty much done for as a country. We'd have no means of "making money" other than, well, making it ourselves via unabashed, raw printing. I'm not talking normal printing to expand the monetary supply, I'm talking Weimar Republic, or Zimbabwe. Complete collapse at that point.

Could it happen? It's a remote possibility. I'll let you know when we see the real balance sheet, see what our true debt is, and how much the interest payments alone are on that. If we can't make interest payments (y'know, yields...), that's a default and we're done.


BTW, just got a breaking via Bloomberg - 2Y T's have dropped to a record low yield of 1.052%...that's per year. Market's starting to price in a 2 year timeframe for deep recession.

Baltic Dry Index

Someone pointed out this tool in another thread on here...Very useful



[edit on 20-11-2008 by Criskahta]

If it breaks that 10th October low, we are screwed.
You can see them trying to keep it from doing that.
But as I can see its a fight they seem to be losing.

I am pretty sure the ASX All Ords did not get near 8500. Pretty sure they peaked at 6700 or so. Our markets have halved though. 3332.6 today, falling another 150 odd points.

It is going to get uglier than most ppl can possibly imagine:

Quadrillion dollar derivatives bomb set to blow

The wall street and corporate scoundrels have been taking their
bad debt and hiding it on the UNREGULATED OTC market
as derivatives to get it off their books so they look better.

I have no idea when its coming, just that some of it is happening now,
but the bulk of it is still yet to come.

Well that is my point on this article I have posted in regards
to the true size of the debt.

Ppl are starting to realize that they have been hiding debt in the
market on the UNREGULATED OTC market and calling it derivatives
to make their books look better.

Much like enron did with 700+ shell corps.

Just this time the size is friggin insane !

They say about half of the near 1,000 Trillion USD derivatives
market is credit default swaps and other toxic debt that has
been relabelled as derivatives and is set to avalanche the markets.

Quadrillion dollar derivatives disaster set to blow

Newsweek, Slate, and marketwatch confirm its existence but
talk down the seriousness of it.

Its coming, and when it does collapse it is over.

I'm pretty sure the All Ord peaked at 7300 last November
Glen Stevens said we (Oz) should be careful not to talk ourselves into recession which I think is a fair comment. But to honest investors here are like sheep they follow the US even when there is no reason to do so.