Does 485 Point Rebound Mean Much?

reply to post by Crakeur

If your assessment rings true, then we should see all three indexes open lower due to profit taking during the extended hours...

Correct?

Why was the extended time period opened up in the first place? I am not too familiar with how this all came about, has it always been there? Was it in response to the internet opening up another avenue of trading?

Inquisitive

the pre market and after hour market? not sure if they are related to the advent of the internet. something to look into.

I would expect either a small rise and then a drop or a drop at the start.

A lot depends on what the news feeds us overnight and anything could impact this.

I know that if I made some nice cheese today, I'd take it off the table. the markets are way too volatile and a profit is a profit.

reply to post by Crakeur

Thanks

Me? I see a 100-200 point down opening...

With the Senate reported (saw on FNC, not confirmed yet) to be voting on a Paulson type bill tomorrow....

It could be another Monday (prevote), so if it opens 1-2 hundred down, and dives to say 250-300 down, I would expect a BIG turn around, (prevote), as it is expected to pass the Senate....

Once it passes the Senate...

House Dems will follow suit on Thursday, as long as the Senate vote is Bi- Partisan...

Then a BIG spike, and those who are in the know, just recouped what they lost from the whole sub-prime deal, along with the sweet deal of being able to pass on the trash on their books....

[tinfoil hat on]

Pure speculation...

Would make a good novel though

reply to post by JacKatMtn


not much of a stretch there

truth is, this kind of volatility can make you a lot of money. I know of at least one person who was up about $210,000 today. He lost $280,000 in value monday but the 210k today is all from what he bought last night or early this morning.

[edit on 30-9-2008 by NGC2736]

NGC2736

I can see your point there. But then why the screaming urgency expressed by everyone from the President on down?

Stocks.... don't exactly reflect a company.. they do and they don't. The dynamics are highly complicated.

Take National City for example.. it's stocks tanked, and have not recovered.. they are trading at around $2 a share.. and could possibly be at risk of collapse.

However.. National City was a very, very conservative bank. They actually hold large reserves of cash, profitable assets, and have plenty of capital.. as far as a regional bank goes, they are doing fine. Stock tanks anyways.. in fact, they would have shut down had it not been for their large reserves pulling them through the current crisis. So why sell the stock?

There are (now) three major banks in America.

Chase
Bank of America
Citi

These banks will not fail (though Citi is highly unstable) .. all of these banks (aside citi) are trading at respected levels given circumstances.. however, smaller banks are at much larger risks, fund managers are fleeing financials all together, they are taking massive hits on mutual funds and so on, also individual investors DO NOT want to end up like a WaMu investor. Stuck with .16 a share.

The rally today, while good and bad, is expected.. it levels out how the markets really are, how investors are feeling, and given the lack of volume, the hesitance.

The panic is over this..

WaMu and Wachovia both needed massive infusions of cash to stay alive.. they didn't get it, and they failed.

Citi needs a MASSIVE infusion of cash.. or they die.. they had to pay the FDIC 12 billion in assets, had to cover all POTENTIAL losses, and had to take on $48 billion dollars of losses over the deal..

Citi had no capital to begin with.. if they don't get the cash, they are far to large for any other bank to consume.. they could fail out right and well.. that wouldn't ... be ... good.

The economic situation is ALWAYS WORSE THEN YOUR TOLD.. to avoid panics, and to keep as many people invested as possible. When the fed says everything is fine.. everything is not fine. When the fed says the economy is in trouble.. it's past "in trouble".. and when they say we are in a "crisis" .. we are on the verge of collapse..

The problem with the banks IS NOT THE BANKS FAILING.. allthough that would be the fastest road to the ultimate out come..

It's the fact that because the banks are in trouble, they no longer loan to companies or people..

OR eachother.. which basically means each bank sits on their cash like cave men with a club and hoard it not risking lending any out. For good reason.

But think about daily life in America..

Without credit.. we don't function.. we don't buy TV's, cars, boats, take vacations, shop till we drop during christmas, and companies cannot even keep payroll accounts positive..

UNLESS WE LOOSEN CREDIT WE WILL SEE A DEPRESSION ..

The Great Depression was caused, first and foremost, by the RESTRICTION OF CREDIT.

Do we need the bailout? Yes, and no .. the Federal Reserve has already this week printed OVER 700billion to fund emergency cash loans to banks via over night rates. That hurts the dollar.

The 700 billion was SUPPOSED to be the Government buying "debts over market value" .. a cash infusion is not a profit for a bank, it's actually more debt, however, the government buying assets over valued.. THAT is a profit.

And if banks see profits, investors come back, capital increases the banks ability to lend credit..

Should we give them the money, ie, buy these toxic debts?

I am a strict libertarian, I believe in the Free Market, I believe if we must see a depression, bring it on, it's the natural order of things.

Should the average American want this? No, but should see it as necessary for our survival..

Should they feel "wronged" .. absolutely, they should.. the companies charging you 30% interest on your credit cards, 6% on your home, fixed innocent American's with ARMS and trap mortgages, balloons and other garbage are begging to Congress wearing $10k suits that they need YOUR money.

To hell with them. Our forefathers are rolling in their graves...

The Oligarchy they fought to protect us from.. the Tyrants they defeated.. the excessive taxation they sought to avoid.. are all back, in a new form, new disguise, new tactics to match the times..

It's a down right shame.

Make no mistake, we are close to disaster..

If the economy shrinks, if companies go out of business, unemployment rises, tax revenue decreases, we will see Soviet Union Collapse 2.0

Why not just insure the 401s and the pension funds and let the market find it's new level?

You can actually sue over 401(k) losses. I posted the information in a thread, forget which one, yesterday..

Anyways.. 401ks invest in stock, true, and treasuries and so on.. but it you give money to 401k's, it's only going to a certain group of people.. most 401k investments would then be buying treasury bills to ride out the waves and the banks would get left out for certain.

I don't have a 401k.. or pension .. why should those who have them deserve free money?

JacKatMtn

Why was the extended time period opened up in the first place? I am not too familiar with how this all came about, has it always been there? Was it in response to the internet opening up another avenue of trading?

I believe you mean after hour trading? .. Because that's always been around, for the more risky investor. You cannot see current value of stock, you cannot liquidate stock, I see it as trading in the dark.. I like having my monitors with graphs and live feeds.

Also, what Crakeur may have been refering to perhaps is Futures Market .. which the Dow is down 55 points at the moment, though Future levels do not always indicate how the day will turn out by any means.

Also.. all this comparison to 1929 I see lately..

It's ironic to me, a studier of history.. but take a look anyways:

1929


Man selling car for $100 February: Astrologer Evangeline Adams, who counts Charlie Chaplin, Mary Pickford, and J. P. Morgan among her clients, predicts the market will rise in the coming months.

March 4: President Herbert Hoover is inaugurated. Nicknamed "The Great Engineer," the former geologist and mining engineer takes office amid booming prosperity. During the campaign, he has promised: "We shall soon, with the help of God, be in sight of the day when poverty will be banished from this nation."

March 8: Michael J. Meehan begins one of the most successful brokerage pools in Wall Street history. Over the next ten days, he drives the value of R.C.A. stock up almost 50%. In today's money, his pool will make the colluding investors $100 million.

March 15: Newspapers quote Treasury Secretary Andrew Mellon saying there are bargains to be found in the bond market. Wall Street is in the midst of a buying frenzy. As the market rises, some begin to fear it will soon collapse. The Federal Reserve Board meets, but does not make any public statements.

March 25: A mini-crash begins as investors start to sell, revealing the market's shaky foundations. For the many people playing the market with borrowed money, the day is a disaster, as margin calls wipe out their holdings. While the investors seek to borrow more money, interest rates soar to 20 percent. The New York Daily News calls it a "selling avalanche."

March 27: Banker Charles Mitchell announces that the national city bank will provide $25 million in credit to stop the market's slide. His move stops the panic, and call money declines from 20 to eight percent. Senator and former Treasury Secretary Carter Glass calls for Mitchell to resign from his post on the Federal Reserve Board because of his intervention in the market.

Spring: The American economy shows ominous signs of trouble. Steel production is declining, construction is sluggish, car sales are down, and consumers are building up high debts because of easy credit. Yet the stock market continues its upward momentum, heedless of real economic indicators.

May 14: The N.Y.S.E. opens a new bond room, adding 6,000 feet to the trading floor.

Summer: The market continues to rebound, and stocks hit record levels month after month.

August 17: Michael Meehan's brokerage firm launches a new service: an office aboard ocean liners, including the Berengaria. This convenience allows transatlantic passengers to buy or sell shares during the weeklong passage between the U.S. and Europe.

September 3: After a surge of optimism, the bull market reaches its peak -- the Dow Jones Industrial Average closes at 381.17. A newspaper headline trumpets, "Public Demand for Stock Appears Insatiable."

September 5: Bearish economist Roger Babson gives a speech, saying, "Sooner or later, a crash is coming, and it may be terrific." He has been delivering this message for two years, but for the first time, investors listen. The market takes a severe dip, which will be called the "Babson Break." The next day, prices will stabilize, but the collapse has begun.

Mid-September: The market fluctuates wildly up and down.

October 24: "Black Thursday." The economic bubble finally bursts. Stock prices fall sharply on a day of heavy liquidation. Ticker tape runs four hours later than normal at a volume of 12.9 million shares. Headlines will report the market's paper loss at $5 billion. A pool of bankers act to stem the drop by putting more money into the market, and President Hoover reassures Americans that U.S. business is sound. Within a few days, a headline will read, "Brokers Believe Worst is Over and Recommend Buying of Real Bargains."

October 28: "Black Monday." The stock market falls 22.6%, the highest one-day decline in U.S. history. The crash triggers similar declines in markets around the world.

October 29: "Black Tuesday." Panic sets in as investors all try to sell their stocks at once. Over 16 million shares of stock are sold, setting a record -- and the market records over $14 billion in paper losses. Stock tickers cannot keep up with the heavy trading volume. At the end of the day, the market is down 33 points, more than 12.8%. Some of the nation's financial elite, including General Motors' William C. Durant and the Rockefeller family, show confidence by buying stocks, but their efforts fail to stem the tide.

November 23: After weeks in freefall, the market hits its bottom and stabilizes. The New York Times reports, "Regular Schedule to be Resumed, but Trading Will Be Suspended Last Half of Week; Business Nearly Normal." The market's daily volume is at 3 million shares with "orderly although irregular" prices.

www.pbs.org...

reply to post by NGC2736


For the US to be at lowest stock levels in comparison to the Great Depression, the DOW would have to close at 1,595.. an 89% fall from it's record high of 14,500.

reply to post by Crakeur


Some people say, you can only loose what you put in..

But if you put 200k into a trading account..

Open the Margin option

Buy 400k worth of stock

See a 75% decline..

You end up liquidating your house, car, retirement to pay off the bank you borrowed from..

I know of only one person who actually lost over 100k+ more then what he originally put in.. he lost it all in 2000 I believe, dot com bust.

reply to post by NGC2736


Investors are telling us that their bluff was called.

reply to post by NGC2736


Stocks cannot "freefall" any more, policies in place automatically suspend trading.

However, it can be a long trek downward..

If in August last year you said the DOW would peak at 14.5k and drop to almost 10k ..

You would have been laughed at.

So is another 4k points hard to believe in the next few months?

How about 4k after that?

It all depends on how the economy reacts to no credit.

(gas stations that don't have cash on hand to buy gas....

Cannot buy it without an extension of credit. just another way it will effect our daily lives)

Originally posted by Rockpuck
I know of only one person who actually lost over 100k+ more then what he originally put in.. he lost it all in 2000 I believe, dot com bust.

I know a few. some during the dot com days and one who's in a pickle now thanks to big gains in 07 and big losses in 08

[edit on 1-10-2008 by Crakeur]

www.bloomberg.com...

Futures are -77 right now. I saw them down about -150 throughout the night. I think if the bill passes, it could be a good day for wall street but if the bill fails, it could get pretty ugly.

I still think the good days on wall street are limited. Even if the bill passes, the luster will wear off.

Originally posted by Rockpuck

Chase
Bank of America
Citi

These banks will not fail (though Citi is highly unstable) .. all of these banks (aside citi) are trading at respected levels given circumstances..
WaMu and Wachovia both needed massive infusions of cash to stay alive.. they didn't get it, and they failed.

Citi needs a MASSIVE infusion of cash.. or they die.. they had to pay the FDIC 12 billion in assets, had to cover all POTENTIAL losses, and had to take on $48 billion dollars of losses over the deal..

I don't know how Citi is still alive, is rating is poor, at the end of 2007 it had huge derivatives leveraged against its asset base at nearly 40 to 1(Bear Stearns had something similar i think), and massive exposure to Credit Derivatives at something like 250%. Much higher than Wachovia, Merrill Lynch, Lehmans, etc, with the current value of market, these derivatives are worth squat, leaving Citi carrying heavy, how are they still going? I don't get it. JPM Chase was something Like 70 to 1 and Bank of A was similar to Citi, these banks have been swallowing others wholesale? what is 700billion going to do, JPM had 92 trillion in Derivatives. Citi had 34 till last finacial year ending 2007.
Maybe this is a little off topic, but the stock market plummeting should have seen these Banks topple over, I don't get it?
I think Citi will go next, and the bailouts will get bigger. What do you guys think.

reply to post by atlasastro

their seems to be different layers involved. each layer has it own reason's for its behavior.

at the top layer transfers of ownership occur. these people are in the know. they hold assets not for short term gain, but because they mangage the worlds production. the losers in war are forced to sell to the winners and at a discount. losers don't dictate terms. a house passage of the bailout could have prolonged their stay but after its failure the winners say, 'accept surrender or sell at a lower price later.' better yet, we'll buy you at a yard sale.

a layer below that, associates of the losers begin to cash out or switch sides. apparently they decided to cash out with an option to switch at a future date. the higher levels of this layer are almost just like the top layer so switching sides is not an option and they just cash out and disappear.

in the next layer, I'd call it the institutional investor level; mutual funds and such. allocate resources, buy, sell and hold based on statistics and market information. this is the machine level. policy based investing with very little human judgement.

the lowest level are individuals, the same as the institutional level, but with less capital and influence and narrower investment focus, who go along for the ride. pulling through based on experience and an iron constitution.

On Monday, a massive surrender occured at the top and the lower levels just followed suit. deals wrapped up on tuesday, showing that their exists at least a second perspective in this world in addition to the doomsday perspective. otherwise who would buy soon to be useless assets?

most people at the lower two layers don't know much and flee to treasuries and gold. that being the fastest and easiest solution to uncertainty.

for all who don't know, there is a war going on and one side is losing everything. once you come to terms with what that means and know what side you are on. during times like these, the market makes sense. soon there will be a single mind at the top layer.

[edit on 1-10-2008 by bruxfain]

Originally posted by NGC2736


See, it's questions like that which make the average Joe question the rational of forking out $700B, which may only be a band aid applied to gutshot mule.

I know what you mean. When you look at the risk these guys traded on, and the amounts, 700b seems like nothing. I think Bank of A, JPM Chase and Citi have bought up to protect their own derivatives that an outright collapses of Bear Stearns, Wahovia, Merrill etc woulld have exposed them too aswell, and the Govt. Knows this, because it has given them the cash to buy up these banks. The average Joe meanwhile is told he has to fork out 700b to get things going again for his own sake. Right!
I just saw the Dow was Down 100 after opening, people are taking money out after yesterdays small gains, maybe?

reply to post by bruxfain

Originally posted by NGC2736
reply to post by bruxfain

 

I can see the "war" idea. But it's the blood(money) of living breathing taxpayers which gets shed in this carnage. It makes it easier to understand the feelings of most of France during their "Time of Troubles", when the nobles and the rich met grisly fates. (Not advocating or condoning such things, mind you, but understanding the mindset of the times.)

A critical component of asset pricing models is interest rates. A major component of interest rates is a value that represents UNCERTAINTY.

As uncertainty increases asset prices fall. The meaning of uncertainty is that people DON'T KNOW. Uncertainty can also contribute to extreme fluctuations as you are undoubtedly seeing.

Yours is the second reference in as many days that I have seen written a reference regarding the time of troubles in France and the end that Louis XVI and that whole crowd came to. I have somewhat of a personal connection to those times and have this to say:

It didn't end with the monarchy and nobles. Before the end of the century most of the leaders of the insurrection also met with violent ends. As for the the regular people, their population was so completely destroyed that prostitution was made legal to replenish it. Ultimately, France was conquered completely and only a shell exists there to this day. When you look at the Big picture, the mindset in France in those days was suicidal.

There are people out here really trying to save our world. Times like this require living breathing taxpayers to do whats best for them; nothing at all because they don't know. Otherwise, they'll probably end up killing themselves or getting themselves killed.

When the dust settles and their vision has improved then they should comment on what the leadership is doing. In a democracy it is never to late to change ones mind.

Don't panic, this is a controlled and focused demolition.

[edit on 1-10-2008 by bruxfain]