Friday, June 20, 2008

Bottom Falling Out of Market

In a fitting finale to a truly horrible week for US equity investors, all major indices bottomed out the week with their largest losses. The Dow, S&P and NYSE all closed more than 1.75% lower on the day. The NASDAQ was down more than 2.25%.

The final print on the Dow today was within 100 points of the March 10 low of 11,750. The NASDAQ and NYSE still have cushion from the March 10 bottoms. For the NASDAQ, that mark is 2169. On the same day, the NYSE Composite Index closed at 8534. The S&P 500 is much closer to its low of 1273.

Dow 11,842.69 -220.40; NASDAQ 2,406.09 -55.97; S&P 500 1,317.93 -24.90; NYSE Composite 8,829.25 -159.59

To make matters worse, volume was unusually high, owing partly to the phenomena known as a "triple witching day", in which stock index futures, stock index options and equity options all expire on the same day. With the prevailing sentiment decidedly negative, there was nothing to halt the all-day selling spree that occurred on Friday.

Forex Beginner's Resource Website
Forex Foreign Currency Exchange Trading Beginner's Resource Center.
Declining issues, as expected, far outnumbered advancers, by a better-than 3-1 margin, 4864-1424. New lows soared past new highs, widening the margin to 554-97.

Not unexpectedly, oil rose another $2.76, to $135.36. Gold lost 50 cents to close at $903.70. Silver fell 7 cents to $17.40. While the rally in oil continues, it seems to be over for the metals.

The headline numbers were confirmed by the breadth shown in the internals. The bottom is truly falling out of the market.

This should come as no surprise to anyone trading stocks, holding down a job or putting gas into an automobile. Life in the USA has been heading downhill for average Americans for years and the ineptitude, cowardice and corruption of politicians in Washington, corporate executives and market insiders has only exacerbated the condition.

If we are not nearing a complete collapse of the financial system, then the reaction on Wall Street would be a complete canard. Sadly, it is not. The US, and to a large extent, the world economy is being brought to its knees by absolute corrupted power at the very top of the heap. The rich are squeezing every last drop of blood and money from the middle and lower class and there seems to be no end to their rapacious appetites.

The problem with so much wealth being held by such a small minority - roughly the top 1 or 2 per cent of the population - does hold a certain level of risk for all parties. In a complete rendering of the economic and social fabric, the elites must worry for their very lives. History is replete with examples, from the fall of Rome to the French Revolution. We are approaching a time in which only those with money and/or weapons will be able to survive.

It's a stark statement on the human condition, but a close inspection of the mega-state environment reveals that we are no further away from feudalism than were inhabitants of Europe in the 15th century. The world is being shaped and defined by a contrived and often patently false mass media while huge governments with uncontested power lord over the classes and force their taxes and dictums upon all of the citizenry.

Freedom and liberty are fleeting ideals, even in these once-proud United States. Civil liberties are being challenged daily and the rights of the individual pales in comparison to the absolute power and overwhelming force of the government apparatus.

Stocks will continue to decline for the time being. There is a bottom, somewhere, though the depths plumbed already are merely prologue.

Our politicians preen and strut, presenting images of well-being while doing nothing. Corporatists continue their theft and exploitation of the public, with a focus on home, food and fuel, the basics of human existence. Meanwhile, an ignorant, misinformed public carries on as best it can without a champion or a clue.

We are hurtling headlong into a cataclysmic future and it is closer than most wish to believe.

NYSE Volume 2,018,469,000
NASDAQ Volume 2,601,664,000

No comments: