The stock market is crashing....

[mit]

markets are similar to 87 crash reports sunday times


http://www.timesonline.co.uk/article/0,,2095-2189601,00.html

The Aussie market has had a steep rise in price but the US Market has been largely flat for 5 years. Also what made the fall worse is in 1987 was the huge amount of portfolio insurance (with premiums based on Efficient Market theory :swear: so way under priced) sold. These insurance companies panic sold their hedges and many went broke (Note that the correction was very short though deep and the DOW continued upward after this)

This is what annoys me about pundantry take 3 parallels between now and something in the past and write a story about history repeating itself.

 

[IGO4IT]

Gold is up ($665) & even that DOW closed 0.24% lower in last few minutes but traded higher whole session!! which is a sign of confidence.

closing dive is expected at least for a week as no one trusts having their money in overnight!!! imo, we should also get the before the close dive in XJO as many will take less but leave before close as they're scared of another dive.

cheers,

 

[Broadside]

there is a major tug of war at the moment in the US between bulls and bears: that slide near the close last night is not a good sign, the bulls are losing their grip despite strong rises in Europe. If those inflation figures on Friday are bad it could be a turning point in the markets. I think the risk is definitely on the downside. There is so much volatility and hot money around the place it exacerbates the uncertainty. Copper up 12% last night. Gold down 10% the night before. Not good at all.

 

[Fab]

Going nicely back up at the moment. I was not aware of inflation figure being released on friday but if that is the case I agree that will boost or burst this new uptrend

 

[IGO4IT]

even after a poor performance during the day today, Gold is higher tonight $2 to $668. Metals are all up again & I think atmosphere is getting ready for another nervous trading in the DOW tonight.

the dive of the DOW before close was defenitely "uncertainty" & worry that tomorrow may hold new surprises. we all have to wake up to the fact that the commodoties market now is very paranoid, everyone is ONLY willing to trust the "the last few hours trend" but defenitely over-night risk is too much to handle NOW! Perfectionists of catching the trend form line to line may now compromise for whatever profit they could get their hands on as long as their money is safe & in their hands before they go to sleep.

XJO done same thing today, everyone logically knew that we're recovering or at least in the way but no one could trust leaving their money over night. Proof: both DOW & ASX200 traded higher the whole day but closed lower in last 1-2 hours! it could be bears covering their sales during the drop party in the last 5 days or it could be that everyone realised that ..."hey...we could be really over-reacting here"

it will be intresting to watch the DOW close today & Friday before weekend! I have no doubt that it will be stable tonight but I don't know if anyone will trust leaving their money in for another day. Gold price at close will be the judge!

cheers,

 

[chromatic]

SPI is -16 now, FTSE is well down and BHP and RIO are -2% and -1% in London, respectively. S&P 500 look pretty shakey too. Base metals are well down and copper has given up most of the overnight gains it made yesterday. I think the carnage isn't quite over yet and I wouldn't want to be long tonight.

 

[wayneL]

The gold and oil rebound could be in trouble too...both breaking intraday support.

Doesn't look good for the dip buyers.

 

[IGO4IT]

I find the realtionship between DOW & FTSE is very strange in last 2 days, it could be gold/metals prices at close of both but it seems to me that both FTSE & DOW are taking turns in closing in opposite direction, which somehow doesn't make sense unless both are becoming that sensitive to metals pricing that intraday trading is becoming the fact & longing is no longer an option!!

Am I imagining things?

 

[brerwallabi]

We may see a bit more downside as those in the US may pull some profit (those who haven't) over the next few days before their long weekend fearing a drop below 11000, remember US markets closed on Monday and Tuesday they release consumer onfidence data, an interesting few days ahead.

 

[wayneL]

http://business.timesonline.co.uk/article/0,,9063-2196025,00.html

Share guru says slide could go on for months
By Patrick Hosking and Gary Duncan
BRITAIN’S most successful stockpicker yesterday told investors to brace themselves for months of falling share prices.

Anthony Bolton, who runs £6.5 billion of funds for Fidelity International, suggested that the jitters of the past two weeks could turn into a more prolonged bear phase as shares plunged again.

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Click here to find out more!
In a rare public appearance, Mr Bolton said: “I think it could be the end of the bull market. The correction could be months, not days.”

His comments came as markets on both sides of the Channel suffered another battering that reversed much of Tuesday’s rebound. The FTSE 100 index lost a struggle to cling to its 2005 closing value and finished down 91.6 points, or 1.6 per cent, at 5,587.1.

In a sign of market nervousness, two initial public offerings were postponed yesterday: CMC Markets, which provides spread-betting and foreign exchange services, and Sigma Capital Investments, the Black Sea property group. Both said they planned to wait until the markets calmed.

Mr Bolton pointed to the steep rise in share prices over the past three years and the increasing difficulty in finding value in stocks, adding: “The bull market is old.”

However, a sharp slide could prevent a more protracted downturn, he said: “The faster it goes down, the shorter the consolidation phase is likely to be.” In March Mr Bolton is understood to have taken out a vast insurance policy against falling share prices, buying put options that give him the right to sell about £1.6 billion of blue-chip stocks at pre-slide prices.

The options, which expire next month, were bought on behalf of Fidelity’s flagship Special Situations fund and an investment trust, Fidelity Special Values.

After his speech to the Securities and Investment Institute, Mr Bolton said that a number of factors could lead to a protracted bear phase, including inflation fears, bird flu and the fizzling out of US consumption.

He also pointed to the warning from the US billionaire Warren Buffett of the dangers of a blow-up in the credit derivatives market. “When money is virtually free, that’s when people do silly things,” he told The Times.

Hopes that Tuesday’s bounceback in leading markets could end investors’ rush for the exits were dashed by another bout of heavy selling in Europe. In London, the FTSE’s losses were deepened by a continued retreat in shares in mining companies as key commodity prices tumbled again. Copper prices fell by as much as 7 per cent, with gold and silver also dropping sharply. In Paris, the CAC 40 dropped 1.3 per cent, while Germany’s DAX closed down 1.6 per cent. On Wall Street, shares slid into negative territory but then recovered.

 

[tech/a]

In the short term there are factors which are certainly going to pull the market into correction.

Barring Bird Flu epidemic or War.
In the longer term demand will outstrip supply and the bull will continue to run.

Time to move out of my short term positions and watch

 

[professor_frink]

looks like we might get a bit of a bounce today, which will give the jan high a bit more validity as a support area. I'm curious as to how long it will hold for.

 

[Sean K]

Wouldn't the Jan/Feb lows around 4800ish be the support area.

I'm a jube at tech analysis so any explanation on that would be great.

 

[professor_frink]

that could be the next stop if we go lower than current levels. The green line on the chart I just posted is the trendline starting from the may05/oct05 levels, which is also in the 4800ish area at the moment, so we could find some fairly strong support in that area.

 

[chromatic]

Looks like strong resistance around 5040 on XJO and SPI. S&P futures are marginally lower and lots of data coming out tonight so perhaps the cat is just having another bounce?

 

[powerkoala]

I hate dead cat who keep bouncing....
better cat that climbs the highest tree

 

[noirua]

http://biz.yahoo.com/ap/060530/asian_markets.html? y=4

 

[noirua]

http://biz.yahoo.com/ap/060530/wall_street_futures.html?.v=2

 

[wayneL]

http://biz.yahoo.com/ap/060530/asian_markets.html? y=4

We're having a nice little bear party on the US indexes too.

 

[powerkoala]

when we will have a good bull ?
gold up, oil up, yet basemetals down again
europe down and dow going south again...
what a pity ...