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Monday, January 21, 2008

Worldwide House of Horrors Today

Posted by Mark at 1:49 PM TweetThis
Some very breathtaking action today folks
  • Stocks fell sharply worldwide Monday following declines on Wall Street last week amid investor pessimism over the U.S. government's stimulus plan to prevent a recession.
  • Britain's benchmark FTSE-100 slumped 5.5 percent
  • France's CAC-40 Index tumbled 6.8 percent
  • Germany's blue-chip DAX 30 plunged 7.2 percent
  • India's benchmark stock index tumbled 7.4 percent
  • Hong Kong's blue-chip Hang Seng index plummeted 5.5 percent
  • In Brazil, stocks plunged 6.9 percent
  • Japan's benchmark Nikkei 225 index slid 3.9 percent to close at 13,325.94 points, its lowest close in more than two years
  • China's Shanghai Composite index plunged 5.1 percent, partly on worries about mainland Chinese banks' exposure to risky U.S. mortgage investments.
This is the type of action that will get people selling their mutual funds and going to money markets tomorrow. Probably near a (tradeable) bottom. But one cannot blame them, especially if they came into the market anytime in the last 5 years as they've never seen this action before. Even when you've seen it before, it still is a bit of a shock to the system to see established Western European indexes taking this type of single day carnage. India is one thing; to see Germany lose >7% in 1 session is another.

Posted by Mark at 1:49 PM Comments (4) | Edit This Post | Create A New Post

4 comments:

pik said...

I may just stay in bed tomorrow....but seriously, what are you looking to do to mitigate losses?

January 21, 2008 4:06 PM  
TraderMark said...

Honestly I think we are near the end of this leg down. Tomorrow should be a washout day. Do I wish I had sold and had more cash last week. YEP! But I think selling tomorrow will prove to be a pretty bad bet. It's like selling in the 8th inning of a selloff. Will tomorrow be an absolute bottom? No clue. But as I have been writing, once we broke those key support levels from Aug/Nov, our destiny looked to be set - this type of poor action (open high, sell off all day) generally ends with what I call "waterfall selling". So tomorrow might be Niagra Falls. But from there I think we are up in the coming 2-3 weeks, and probably in a meaningful way. At that point I will sell down some exposure and reinstitute the cash/short exposure I so foolishly abandoned 10 days too early! Tomorrow let's just hold on, it could be drastic intraday but many times we get days like that, and then late afternoon the buyers come into the market.

January 21, 2008 4:43 PM  
hieunguy said...

This is a repeat of 2000, looking at the sp500 chart, will we bounce at 1250 or 1100, that 's the question? a 10% bounce from 1250 get us back to 1370, the broken line. that too easy, and i don't see the financial stock can support that kind of move. The problem this time is the sell off is only 4 weeks old, a lot of peoples still stuck in 401k, hoping for the rebound. What about earning report in the next 2 weeks? can it support a rebound or the market going to use it to sell off further? i am looking at BLK, SLB to give a clue of what to come for the short term.But the next 6 months, got to play the market on the short side.

January 21, 2008 5:08 PM  
Advisor Sarah said...

Don't all you guys forecasting with your charts (weegee boards) understand that the industry has suckered you into believing there is no risk in attempting to exceed market results? ANYTIME you attempt to exceed results, you introduce the risk of also underperforming. There is a price to that risk, and you have the choice to avoid it, and doing so has value. Check out the return honor roll on www.fundgrades.com. Then sort on risk (unlike Morningstar which combines risk and return in their star ratings, Fundgrades keeps them seperate so you can see whether you are taking needless risks for those PAST returns.)
According to an article I saw about fundgrades from a publication called, Advisor Perspectives, only 19% of all graded funds received a risk grade of "F", yet if you sort for risk in the return honor roll, you will find that HALF of the return honor roll grade "F" for risk...two and a half times that of all funds. You don't realize that you are being sold by the product vendors, discount brokerages, "trading tool" educators like invest tools, etc. They are profiting and laughing all the way to the bank while you believe you cracked the code.

February 15, 2008 5:03 PM  

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