Thursday, October 23, 2008

Markets Still Jittery

A 400-point, last hour rally sent the Dow Jones Industrials to a healthy gain today, though the NASDAQ finished at new multi-year lows and the S&P 500 was modestly higher. Once again, a high level of volatility was evident, as trade was more jumpy than choppy.

Large positions are changing in this explosive environment. The markets are in the process of retesting previous lows. By today's standard, we survived, barely, for a day.

That's how life is now measured on Wall Street: by the day, or hour, or even minutes. As far as a bottom is concerned, I'm fairly convinced we haven't seen it yet. A true bottoming out in value could still be 3-4 months out, or as soon as mid-November. From all indications, however, the holiday season is almost certainly going to disappoint. How much the market has already discounted the 4th quarter is an open question. A good guess would be, "probably not much."

One gets the definite impression that there are more than a few high rollers with cash in hand, waiting to pounce on some asset, but that they're waiting until after US election day, November 4. On that day, we may be witness to a transformational change in the way our country is run and in the administration of policy. Or we may elect a candidate who wishes to go very much further along the path recently traveled, and that doesn't seem to be working well at all.

In any case, there's surely enough action to keep one's attention, though the overall effect of trading the last two weeks has been nearly a stalemate against the lows of October 9 and 10.

Dow 8,691.25 +172.04; NASDAQ 1,603.91 -11.84; S&P 500 908.11 +11.33; NYSE Composite 5,671.93 +41.46

Oil gained a bit, up $1.09, to $67.84. It still seems to have further to fall. Likewise, gold extended its losses another $20.50, to $714.70. Silver bucked the trend, gaining four cents to $9.50. Gold seems determined to test support in the $600-650 range, and fairly soon. Warning: the precious metals may be in a falling asset zone, a message that's been reiterated right on this blog for months now.

The internals told an entirely different story for the day's trading. Declining issues led advancers, 4185-2115. There were 1390 new lows to just 14 new highs. The level of new lows has now become alarming once again, signaling another fresh round of selling and devaluation. It would not be surprising in the least.

Volume was higher than normal, especially on the NASDAQ, the only major index to show a loss on the day, where it was heavy.

NYSE Volume 1,543,673,000
NASDAQ Volume 3,158,630,000

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