Market Free Falls, Recession Fears Grow
Nothing could stop the sell off that ensued today driving the market down to substantial losses across the board. The market opened to the downside and never looked back, with the last hour yielding the largest losses of the day.
All three major indices were sold heavily. The NASDAQ Composite finished at 2,748.76 down 2.7% on the day, the Dow Jones Industrials finished at 13,300 down 2.64%, and the S&P 500 closed at 1,475.62 down a staggering 2.94%.
The big fear is whether or not a recession is around the corner. With the financial sector continuing to get pounded many investors have a lot to consider about the near term future. The dollar is continuing to get hit which helped gold climb $10.10 to $833.50, and oil intraday broke above $98 a barrel, settling at just above $96 at its close.
The loses are continuing to ramp up in the financial sector with insurance giant American International Group (AIG) slipping 6.7% ahead of its quarterly report. Washington Mutual (WM) fell 17.3% today, Goldman Sachs (GS) fell 4.02%, and Morgan Stanley(MS) lost 6.1%.
Also big today was General Motors (GM) which reported third-quarter losses of $39 Billion due to an accounting change. The auto maker was down $2.21 or 6.1% on the day. Cisco (CSCO) reported earnings at the close today reporting a 37% jump in first-quarter profits but shares are down a staggering 12% as of 5:25 PM in after hours trading.
The leaders of the market which are mostly technology based held up pretty well until the last hour. Google (GOOG) finished the day down only 1.19%, Apple (AAPL) closed down 2.86%, and Baidu.com (BIDU) slipped at the end of the day to finish down $12.70 or 3.12%. All three stocks are down after hours as well and will open to a sell off right at the opening bell tomorrow.
If you haven’t heard it then you heard it here first, if the leaders collapse and breakdown the market will confirm its downward spiral. Don’t be afraid to take profits and move your portfolio into more cash. Tighten those stops and always go with the trend, not against it.
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We’ve broken support with both the DJIA and the S&P 500. I’m sticking my neck out and saying we’ll see DJIA 13k and S&P 1420 before we recover. I hope I’m wrong though.
Wouldn’t surprise me. The S&P close below the 200 MA today was something to definitely not overlook.
Despite AAPL at 180 and GOOG at over $700 - we have over 800, oil near 100, a rumored $1 trillion in “toxic debt” yet to be revealed, and a sagging housing market.
Most troubling are three acquiantances who are looking for jobs and encountering the dreaded “hiring freeze” from various companies.
To sum up - my “recession” flag is waving - seeing more signs that’s it just around the corner if it’s not here already.
I don’t like recessions, but there is a silver lining. If we enter a bear market, think of the beautifully sculpted cup and handle charts that will be on the other side.
I don’t think seeing 13,000 on the Dow would be surprising at all, in fact we might go down to 12,800 or even a little lower in the short term. As Blain says, watch those leaders. I’ll be watching GOOG, RIMM, DRYS, POT, etc. all those stocks that have had massive runs in the past few months.
First thing tomorrow morning I’m placing orders for SPY puts. Not going uninsured this time around.
yeah man csco killed me today plus some others.. this really couldn’t get any worse
I’ve been heavy in the tech sector so today wasn’t as bad as it could’ve been. I’m still waiting to see what happens tomorrow. I’m already really low in terms of cash invested (percentage-wise to my cash in my account) so if I do start going into cash, it won’t be by such a significant amount as others will probably take out.
I don’t think that we are done with the bad news actually. Many banks have interest in commercial papers and they yet don’t talk about it. This is definitely a scary time for the market!
Blain, maybe you could write about short selling? I think that it will be one of the best practice in the following years!
Aaron - GOOG is down 50 dollars today alone
!
Ouch! Man what a bad day for my portfolio.
[...] Proshares Ultrashort QQQQ (QID) is up over 8% thus far today which should make any investor who say yesterday’s sell off as a sign to bail out. The QID is an exchange traded fund that performs at double the inverse of [...]