Market Warning


Active member
I think we are back to Rizgars market warning scenario. The markets are still firmly in a downtrend with many warning signs. Dow and Nazdaq futures are barely positive and things not looking good. Nazdaq is now at its lowest point since 1999. The immediate future will depend on whether the Fed reduces interest rates on Friday. Even if it cuts by 0.50% it is now seen as too late to help the markets in the short term. America is facing the possibility of a hard landing and full recession, certainly in terms of company earnings. MORE profit warnings are expected in first quarter. Is a market CRASH possible? Of course it is, the American public rely on the stock market for income and wealth. If the selling increases, and I have said this before, selling could reach critical mass then CRASH. Probably won't happen but it is looking more and more dangerous over there. THE GOOD NEWS IS: shares are likely to get cheaper but I do not think members should be tempted back into stocks too soon. WAIT a couple of days to end of week to see how NON FARM PAY ROLLS come in and whether the FED moves on interest rates. Remember the rule, for mere mortals like me, it becomes very difficult to win when a general sell off occurs. It reminded me this morning when Anatov (ATV) lost 4p. My £250 profit suddenly became £85. Did I take it, you bet I did. A profit, is a profit, is a profit. More to the point it was not a loss. I can come back when things improve. That is how you must think. Ask yourself the question, WOULD I BUY THIS STOCK RIGHT NOW, IF THE ANSWER IS NO THEN YOU SHOULD CLOSE THE POSITION. Expect an increase in volatility. Might seem like a contradiction but it is not easy to forecast swings in this market. If you don't believe me look at price of KCOM yesterday, did you forecast the sudden rise, did you buy it and benefit? Unfortunately I did not see the rise coming. Did you buy Vodaphone at £2.30, very risky play, next day up 12p but look at it now. If you did not sell VOD on the day of the rise you are now back to square one with a loss of 8p today. This is intended to show you the extent of the problem. As soon as traders smell a profit they are taking it. Remember patience is the key to success. You do not have to trade to win, sometimes it is better to stay out because the risks become too great. WATCH OUT - THE MARKET IS TELLING US SOMETHING AND ITS NOT A PRETTY PICTURE RIGHT NOW.

No financial advice intended


[This message has been edited by traderx (edited 03-01-2001).]
Just arrived home from work 20.51 hours


But bloody good news, cancel above.

One things that really bugs me, it is all or nothing with the Americans. Why not a careful response instead of raging bulls. It would be far more useful to global markets if NAZ put on say 50 points for 6 days instead of +324 all at once, the biggest rise in its history. This is absolutely mental. These guys have no sense at all. If UK had cut rates between meetings the market would probably fret and decline on the grounds that it increased fears that something serious wrong with the economy. Can we ever win in the UK. WARNING: What will happen tomorrow after this massive rise, I wonder? I bet Charty knows.

Charty does not know, I am afraid. Charty was extremely confident when he/she called the retracement on the Dow, not now.

I have just posted where my money are.

My gut feeling is that prices will be over the roof before the opening, people will be selling their houses to buy at least 1 share of Gim or VOD before 8 am, prices will reach the moon by 8.15-30...and then at some point during the day someone will start taking profits, someone else will remember that the economy is still slowing down..I do not know.

To answer your point on Americans being crazy, there are few things involved here, mainly that the Fed really surprised the market, this is the key, as a result, all shorts were taken way and this snowballed.

You have to picture everyone who was short in the market getting on the phone and shouting at their brokers "GET ME OUT, GET ME BLOO*Y OUT AT ANY PRICE FOR GODSAKE!!!!" plus those who were shouting to their broker "GET ME IN, GET ME IN AT ANY PRICE, GODDAMIT!".

In due course I hope to post on these topics!


The above does not represent financial advice.
Joyfully I do not have to get up before 8.00, phone my broker and shout GET ME IN! as I am already long on arm, bhm, pon, kwl...


[This message has been edited by rizgar (edited 03-01-2001).]
Thanks charty, very graphic explanation of why markets bounced so much. I like your style. Interesting to hear comments this morning from city professionals on Bloomberg. As expected a muted (conservative) response from most UK commentators almost resentful of Greenspans attempt to 'interfere' with markets. The consensus seems to be that it changes nothing fundamentally. These people need to wake up, YOU DON'T FIGHT THE FED. It will be interesting to see whether liquidity returns to UK market. THIS IS A DANGEROUS TIME - IN NEXT FEW DAYS REALITY OF BAD ECONOMIC SITUATION COULD RETURN TO HAUNT THE MARKETS.
I prefer to wait to see if a rally develops when it will be safer to hop onto a developing trend. Thanks C

Riz, hope you have a good day. You deserve it brave enough to have been long prior to this rate cut, good luck.