Nasdaq at 16-month lows...

Riz

Experienced member
1,266 4
#1
Dow Jones 10584.37 -61.05
NASDAQ 2511.71 -112.81

The Nasdaq fell to 2511 -16-months low- after the Fed left short-term rates unchanged at its policy-setting meeting.. indication being that risks are now weighted toward conditions that may generate economic weakness in the future...Nasdaq fell below its previous low of the year -set on Nov. 30 - by about 14 points...

All techs rallying before the Fed's decision were hammered afterwards...

Here are some analysts' comments about the Fed's decision and the subsequent bloodbath:

"There was some disappointment that the Fed didn't move [right away]," said Alan Skrainka, equity strategist at Edward Jones.

Miller, Tabak & Co.'s Tony Crescenzi: "In the equity market, where any possibility of stability rests squarely with the hope that current gloomy economic realities might turn, the Fed's ease bias does little to spark investors to believe that economic realities will indeed change...Only a rate cut or actual improvements in the economy could prompt the kind of confidence [needed]. The Fed missed an opportunity Tuesday to provide stability to both the economy and the markets -- which have deteriorated rapidly recently..."

David Sloan, senior economist at 4Cast said, "I'm not astounded by their statement," and that he expects the Fed to ease in January and believes Tuesday's Fed statement confirms it..."Unless we get some shocking data, which is unlikely, a Fed ease [at the next meeting] is pretty much a done deal...The market had been factoring in a rate cut at the January meeting, regardless of whether the Fed would hold on to a neutral stance or an "ease" bias..."

Ian Shepherdson, chief economist at High Frequency Economics who noted that the word "recession" was absent from the entire statement said, "This is not an accident; the Fed does not want to appear alarmist...We think this statement represents a compromise between the hawks and doves, and drafting it was probably a tortuous process."

Quotations from CBS MarketWatch...
 
#2
Thanks Riz for your work. Always useful to get this day-end summary - to prepare on what to do (or more likely what not to do!) at this current time!
Mark

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traderx

Active member
146 2
#4
Rizgar, you seemed to indicate the NAZDAQ may be bottoming out. This is a dangerous time, it could go down on record as one of the worst Christmas' on record for equity traders. I am not sure what the technical position is but I suspect we have seen one support level after another breached on NAZ. My fear is that Americans, who rely on stock market for income will see their hard earned corn going down the drain and panick selling will lead to a crash. I believe a crash occurs when selling activity reaches critical mass and the meltdown follows rapidly. This is possible if we reach 2000. Last time we visited current levels it was less serious but now many economists are not ruling out recession in America. I think this could become a self fulfilling prophecy, whereby the problem with equity markets actually fuels the slowdown, which in turn could lead to recession. A sort of negative feedback loop where one economic factor reinforces another. For the time being this has become entrenched as a negative culture among global investors. If you doubt this, I can assure you there is a serious amount of money sitting in banks just waiting to be invested but institutions will not invest until economic conditions are sufficiently changed to reduce the risk. This is unlikely to occur until interest rates begin to fall and lower costs of borrowing feed into company earnings. Some people are getting badly hurt this time. Looking through tech stocks the losses in last couple of days are substantial. Even small cap stocks like PNC Tel (PTC) have seen a rapid decline. Everything is going pear shaped. Don't ask me where it will end because personally I do not like the look of indicators on many, many, many tech stocks which are heading lower. The 7% loss on NAZ will no doubt take its toll on Techmark tomorrow. Reason tech stocks are being burned, because they still have high PER relative to expected earnings so any expectation of recession or reduced earnings hits them first and hardest. It is not inconcievable that the bear market will spread to old economy stocks in the next few months. My fellow members on this BB, is it not amazing that over the last 3 months everything we have forecast for the equity markets has more or less come true. The bottom line is, DO NOT GO THERE UNLESS YOU ARE VERY BRAVE, HAVE DEEP POCKETS AND ARE A BIT CRAZY. The rewards are always greatest when the risks are highest but so are the potential losses.

ps. by the way riz some nice posts, with a lot of research, really get people thinking

No financial advice intended

Tx
 
#5
Naz up approx 1.5% - which means very little after a 7% collapse. I agree with Trader - I am not too optimistic at present. Things may well fall to 2000 or less, esp as some were hoping for US interest rate cuts on Tues. which never materialised. The watch and be patient - I have learned this one recently and it hurt! Patience will bring the greatest financial rewards in this market. I agree that it would be "courageous" (aka bloody crazy!) to enter at present!
IMHO
Mark


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spock

Junior member
36 0
#6
You may all be right about the market having further to fall and only an idiot says he can call the bottom but a lot of the comments recently on this BB and in the financial press and from companies sound very reminiscent of previous turning points.I have traded through several real bear markets(including the early 70'S when the rumours were that Nat West was going bust) and remember very clearly that all the news is incredibly bad at the bottom.If it is true that investors have liquidated their positions and the institutions have tons of cash, who is left to sell the market?
Please don't think I am trying to call the turn because I can't but for someone like me who has been very liquid for a long time the last few days seems to have many interesting possibilities and I am now a buyer on dips.
Please be careful and good luck to all-myself included!!
 

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