Anyway, today it was Merrill's turn to pony up and they did. Then the Federal Reserve Chairman testified and indicated the economy isn't that good either (more on that tomorrow). As a result, the markets had a terrible, horrible, no good, very bad day. However, I want to use some longer time frames to show what is really happening in the markets.
Above is a 10-day, 5-minute chart of the SPYs. Notice how far and hard they have fallen over the last few days. They have dropped from 141.5 to 133.25 or almost 6%. That's a lot of territory to move on. If you take a look at today's volume there was a ton of it.
The QQQQs have a similar sell-off in progress. They have moved from 48 to 45.39 or about 5.4%.
And the IWMs are clearly in a solidly established downtrend. Traders are fleeing the more speculative side of the market, and are flocking into Treasuries.
The 7-10 year Treasury ETF has increased from 87.9 to 89.70, or an increase of about 2%.
The 20+ year Treasury ETF has increased from 93.4 to 96.12 or almost 3%. This is despite the highest inflation rate in 17 years:
US inflation for all of 2007 hit the highest rate for 17 years, as surging energy and food costs pushed up prices, official data has shown.
Consumer prices rose by 4.1% for all of 2007, up sharply from a 2.5% increase in 2006, the US Labor Department said.
In other words -- safety is the buzzword right now.
2 comments:
"A dismal report on manufacturing activity caught investors by surprise on Thursday morning..."
For the life of me, I can't figure out why anybody should be surprised. Maybe my viewpoint is warped because I live in Michigan, but the warning signs have been evident for quite a while, at least to those with their eyes open.
The Dow was at 13,057 on the 3rd of January, 2008, and today it closed at 12,159, so it is now down 898 points since the start of the year, for a two week decline in value of 6.9%, with no end in sight.
On January 22, 2001, on the first trading day of Herr Busch’s Presidency, the Dow was at 10,578, which means in the last 7 years it has climbed all of 1,581 points, for an average gain of about 225 points a year.
Considering that it’s considered healthy for the Dow to gain about 10% a year, right now it should be hovering near the 20,000 point mark, so seen this way, we’re looking at a shortfall of somewhere around 8,000 points.
Heck of job, Buschy.
What’s really scary in all this is that you just know that Wall Street has not even begun to come clean as to how deep the damage is.
So far all this wreckage is being blamed on the sub-prime loans, and the CDOs these rat fuck geniuses sold amongst themselves, in probably the greatest legal Ponzi Scheme in financial history, but I’ve heard nary a mention in the Financial Press that not only were sub-prime loans CDO’d to the hilt, but they’ve been doing the same damn thing with credit card and car loans.
Which might not be a bad thing, if people pay their credit card and Stupid Ugly Vehicle car loan bills on time, but we’re now starting to see a wave of mass defaults in both those sectors as well, which will render the CDOs based on those loans just as worthless as the sub-prime ones.
Gonna be an interesting year, glad all my assets are in Euros, though when the collapse comes, after this slow moving train wreck of a crash we’re in the middle of runs its course, that might not matter.
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