Will Nasdaq ever stop tumbling down?

[Riz]

Cisco, the bellwhether of the technology stocks, signaled the Nasdaq’s fall below 2000 to a fresh 27-month low… with new worries that the slowing economy will continue to erode corporate profits and waning confidence in a second-half recovery…

Nasdaq is down –129, more than 6% to 1,923… thus for the first time closing below 2,000 since Dec. 14, 1998…

All tech sectors went down, though it was networking and Internet stocks taking the biggest blows…

This time Nasdaq took the Dow Jones down as well... as investors did not turn to defensive stocks instead unloading General Electric, J.P. Morgan Chase and 3M big time…

Thus the Dow Jones also tumbled –436, more than 4 %, to 10,208 which is the lowest close since October 2000…in other words worst percentage loss in 11 months…with all Dow stocks falling, as General Electric, Honeywell, Microsoft, J.P. Morgan Chase, Walt Disney, Boeing, Intel and American Express became the biggest losers…

"We are in a state of semi-panic in the markets… a lot of irrational depression and a lot of irrational selling is going on " said Al Goldman, chief market strategist at A.G. Edwards (CNNfn)…

Nasdaq volume was 2.09b with 3,106 losers to 707 winners…

No analysts talked without using the word bear (market)…only some advising patience…

"The catalyst here is going to be patience… we're in a bear market.. " said Barry Hyman, chief market strategist at Weatherly Securities (CNNfn)…

Other key words widely used are capitulation and bottom…as investors looking for a firm bottom to rush in lost hope in a proper bottom before seeing a proper capitulation in the market…Is this an effective capitulation? Good question that needs to be answered correctly before chasing after cheap stocks…

Investors used to buy on dips…only this time it looks like they want to buy on rock solid bottom which can only be formed after serious capitulation…

So what they are doing is just standing aside and watching how far down the sellers can take the market down…

So what now? At what point will the turn round or at least a sideways market will appear?

When answering this one shouldn’t look at the number of Nasdaq points or support levels on the charts…

Have we got enough fear and panic selling?

I think in real sence it started last Friday and increased today…

What will the Fed do? Stand aside or interfere?

I believe the Fed was/is not worried about the tech stocks going down and down…because they did genuinely believe that the tech stocks were over valued and hyped…in other words they were well aware of it (probably since the beginning of this euphoria)…

So the Fed has no intention to intervene in favour of Nasdaq…but a new development started today…which I think was the thing the Fed was worried about for some time…Nasdaq started to pull the Dow Jones down with itself and this may cause a total collapse in stocks in general…

This of course will effect every single US citizen’s (voter’s) life and the economy in general…now that is something neither the Fed nor the US politicians in power can risk…especially Mr Bush who is very keen to stay in power for two periods…

So I wouldn’t be surprised if the Fed starts signalling further rate cuts very soon and this very soon I think is going to be when Nasdaq and the US stock market in general stop tumbling down…

Riz

 

[titus-uk]

Riz, as usual, excellent and valuable post.

Never considered the idea of the Fed coming in a week early. At what level might this be possible - Dow below 10000? Or is this fantasy?

All the best,
Mark

 

[traderx]

First class Riz, your usual high standard. I saw your reply to my post on the Bookham thread. I agree with all that you say. Anybody's guess as to what happens next. You are astute to say that suddenly defensive stocks are not the safe haven they were 2 weeks ago. The picture is a changing.......watch this space and by the way, do not ignore the deteriorating economic situation in Japan, things just got worse today with Nikkei off some 456 points. Lowest point in 15 years. Japan could add the final blow to an already bad situation. I will leave it at that before I depress the hell out of everybody!

Tx

 

[Uncle]

.....and remember when the USA sneezes, the rest of the world catches cold. Looks like were all in for a torrid time yet!!

 

[mj thomson]

Just read an article stating that the Nasdaq is now down 62% from its peak in March 2000.

Isn't that meant to offer support according to Fibonacci studies (61.8%)?

 

[Giggsy]

Just to add to the gloom i was listening to a top US market analyst discussing the DOW , which i believe is slightly up on year ( miracle! ) . The problem there is that the $dollar has broken out of a 12 year trading range , thus the large US multi`s are now into uncharted territory with pressure on exports and costs . So if anyone is expecting the DOW to lead us to the promise land , it may just not happen.....( hope this is wrong by way ) .

Also a fact apparently , is that the FTSE has sustained a broken range to the downsides . Historically this has always lead to a significant move downwards . So we may have a way to go on the FTSE .

All in all a pretty bad scenario , but lets hope this all turns out to be analysts hot air ....

 

[payneg01]

Hi Riz
This is how I see the Techmark, someone PLEASE tell me I'm wrong!Support @ 1900ish, but 1700-1750 more likely. Of course it can and will probably bounce about on the way.

Only my thoughts.
Greg

 

[madasafish]

If you look at NAS Comp it has 2 major downtrends.
Since September a broad channel down.
Since end January a very narrow down channel much steeper down.

They interesct at the lower half of the September channel at NAS comp around 1475 on March 30.

Bounce then?

Mike