Financial Crisis - Market Developments of Thur 10-9-8
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Financial Crisis Update
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Market Developments
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For
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Thursday 10-9-8
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Editor's Note: I used to be a commodities trader years ago, trading on technical charting factors primarily with fundamentals only as a secondary factor. Hence, I look at the current market situation as a technician. Technical analysis looks at price-action via charts and trading volume oscillations. Often times such technical analysis can use trends to anticipate future market moves. Technical analysis is something of an inexact science but often times it is able to correctly anticipate movements in a given market. Based upon this knowledge background, I'll provide a few non-professional comments below. These comments are not intended as investment advice or guidance - but merely my own opinions and observations.
The entire scope of the markets, both stocks and commodities are showing signs of extreme price movement exhaustions. I am frankly surprised that the stock markets in particular have not yet had at least one or two days of rallying prices to the upside and then holding those prices at the close. There are apparently some outside and uknown fundamental factors that are keeping prices on a downward spike. Most likely, these factors are related to the unknown credit-swap derivatives markets and the liquidations of assets from the now defunct Lehman Brothers Investment Bank. As I understand it, there will be a wave of such liquidation taking place early Friday afternoon - with many tradres suspecting that such action will depress the markets further.
Some traders were interviewed on CNBC and FOX Business Channel on Thursday stating their fears that Friday, today, could be a "Black Friday" with frightful price drops once again, perhaps worse than any previous days trading so far. Whether or not this happens, I do not know, but their comments is cause for alertness. Next Monday is a federal holiday in the USA and banks will be closed. This may add even more stress to the market activities for today, Friday as well as for next Monday and Tuesday. I would expect some sort of minor rally in prices within the next 3 to 4 trading days.
From a technical standpoint, in looking at the daily, weekly, monthly and yearly price charts for the Dow Jones 30 Industrials - Here are key price points that should provide some price support and stability to the DJIA-30.
9750 -- that support level was badly broken a few days ago
9500 - Also badly broken
8500 - Also badly broken yesterday
7900 - The next support level, but only minor support
7500 - Also minor support level
7000 - Fairly major support level plus a Fibonacci Support Retracement level
I rather suspect that for the interim period of 4th Quarter, 7,000 to 7,500 will be the primary support level - from here the market should rally and rebound and move to a trading range between 7,000 to 9,750. Sometime in 2009, I would not be suprised if the 7,000 level is severely tested and broken - and will find support at the following levels as shown below:
5750 - Moderate Support
4750 - Minor Supprt
3500 - Major Support level - plus a Fibonacci Support Retracement Level
3000 - Major Support Level between 3000 and 3500
Other major support levels at
2,000, 1,250 and Extremely Major Support at 1,000.
I am not, repeat NOT predicting anything. I'm providing "technical trends analysis" which is not a 100% predictive science. You will however, find that the these "support" and "resistance" numbers do and will demonstrate such tendencies. Given an abscence of "fundamental" factors, these support/resistance numbers do become major influencing factors for markets.
From what I've been able to pick up from the trading professionals, they are anticipating the stock markets to remain bearish for the next 30 to 60 months or in other words, 2 and a half to 5 years, with a recession (depression?) lasting that long or nearly that long. Most economists think the damage done by the real estate and derivatives bubble will take 10 years to resolve and recover from before a robust economic environment can really take hold. Whether they are correct or not remains to be seen.
All of these comments by myself and or comments by these traders are predicated on the current monetary system of national currencies remaining. Should a 1-world currency - electronic currency at that be established - forget the above trend projections.
As we go to post this page, CNBC and FOX Business News commentators and pundits are now raising the questions and possibility of whether or not the President might declare a "banking holiday" and close US banks for a defined or undefined period of time. I personally have serious doubts as to such an event taking place today or in the next few days, but the fact that such thoughts are actually being mentioned on international television broadcasts raises my eyebrows, as either being extremely reckless or they've been given some hints that something is up. My guess, is the former as opposed to the latter. Even so, President Bush is scheduled to make a statement at 10:25 a.m. Friday, today. The White House comments only indicate his statement will be related to the financial crisis.
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Now for a Round Up of Thursday's Markets
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Market's Slo-Mo Crash Continues
Dow Loses Another 7%
-679 on DJIA-30
The world markets continue with what amounts to a slow-motion crash or as more than one trader puts it - "death by a thousand paper cuts."
Friday markets in Asia continue the tumult with Japan's Nikkei down by more than 10%. Some US traders are concerned that 10-10-8 will be a "black Friday" as the defunct Lehman Brothers Investment Bank completes some derivates transactions, which could further weigh heavily on the markets by early afternoon on Friday. for USA Market action on Thursday. LINK 2 for Asian markets action Thursday night into Friday a.m.
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No Bottom in Sight?
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Japan Markets Worst Tumble Since '87
Lose Nearly 10%
Japan's markets continue to tumble like the rest of the world's financial markets losing nearly 10% of its value in trading on Friday. Media sources use the term "panic" to describe the market activity around the world as investors scramble to convert their assets into liquid cash. More details, .
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Stocks Headed For
Worst Year Since 1937
Paralleling Great Depression
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