Dow 9500 ... Where we go from here...

[BigDH01]

Originally posted by: Dissipate

Originally posted by: BigDH01
I was going to give you a couple of minutes to retract this, before you eat your words, but short squeezes can still happen when the market ends up down. There was a huge rally late in the day because people who were short were taking their profits. As the market started to rally, other short sellers got nervous and liquidated their positions. This created a low supply of stocks (hence the squeeze) hence increasing their value. Overall, it ended up being over a 600 point rally in a very short time. It doesn't matter that the market ended up down overall.

In short, you have no idea what you are talking about .

They were taking profits so obviously stop loss orders weren't kicking in. Either they were taking profits or they were cutting losses, a short squeeze implies that they were cutting losses, NOT taking profits. Your logic fails.

It began with a few short sellers locking in their profits. As they started to buy, the market started to rally. This rally made other short sellers nervous and they decided to buy to hopefully lock in their reduced profits or cut their losses. As more short sellers were looking to buy the price went up. Like I said, short squeeze.

You don't just have to take my word for it.

There was also word that the SEC might enact targeted short sales bans. With an hour to go, many people short needed to get out of their positions. Hence the huge rally late in the day. A short squeeze. It was really quite remarkable in its speed and magnitude.

This happens frequently and is not a difficult concept to understand. You know, you don't always have to be right. You can just admit that your original statement was foolish and learn something.

 

[NoStateofMind]

Originally posted by: Evan Lieb
Sharp swings and volatility like this are a great indication in that, historically, a market calm and recovery follows afterward (how soon is of course difficult to predict). It was definitely an interesting day and I look forward to some recovery, hopefully sometime in the near future. Certainly, this is the most volatile trading day I've ever seen.

Except that we haven't had a situation like this in history before.

 

[Dissipate]

Originally posted by: GodlessAstronomer

Originally posted by: Evan Lieb
Sharp swings and volatility like this are a great indication in that, historically, a market calm and recovery follows afterward (how soon is of course difficult to predict). It was definitely an interesting day and I look forward to some recovery, hopefully sometime in the near future. Certainly, this is the most volatile trading day I've ever seen.

You are so full of shit you're like a feces pinata. It doesn't seem to matter how shitty things look, you're always going to be a cheerleader for Wall St.

Oh snap! :Q

 

[mxyzptlk]

Originally posted by: PC Surgeon

Originally posted by: Evan Lieb
Sharp swings and volatility like this are a great indication in that, historically, a market calm and recovery follows afterward (how soon is of course difficult to predict). It was definitely an interesting day and I look forward to some recovery, hopefully sometime in the near future. Certainly, this is the most volatile trading day I've ever seen.

Except that we haven't had a situation like this in history before.

http://chronicle.com/temp/repr...wmtpc4b6h07p4hy9z83x18

I found this on another forum and it seemed eerily familiar.. Housing/development bubble and mortgage crisis. Interbank lending drying up leading to banks failing for lack of credit. Cheap goods coming from america destabilizing the existing european markets.

 

[Dissipate]

Originally posted by: BigDH01

It began with a few short sellers locking in their profits. As they started to buy, the market started to rally. This rally made other short sellers nervous and they decided to buy to hopefully lock in their reduced profits or cut their losses. As more short sellers were looking to buy the price went up. Like I said, short squeeze.

You don't just have to take my word for it.

There was also word that the SEC might enact targeted short sales bans. With an hour to go, many people short needed to get out of their positions. Hence the huge rally late in the day. A short squeeze. It was really quite remarkable in its speed and magnitude.

This happens frequently and is not a difficult concept to understand. You know, you don't always have to be right. You can just admit that your original statement was foolish and learn something.

It seems that the term may be used loosely here. Here is the definition of a short squeeze from investor words:

short squeeze
Definition

A situation in which the price of the stock rises and investors who sold short rush to buy it to cover their short position and cut their losses. As the price of the stock increases, more short sellers feel compelled to cover their positions. More common than the opposite, long squeeze.

This content can be found on the following page:
http://www.investorwords.com/c...9&term=short%20squeeze

In the case of what happened today it wouldn't make any sense to say they were cutting losses, but rather they were rushing to lock in gains. I'm looking at this from a logical definition oriented perspective regardless of how people are actually using this term.

 

[Eeezee]

Originally posted by: Jawo

Originally posted by: Nocturnal
There's about an hour 45 mins left. I think there's a chance that we see it dip below 8000

Well if it doesn't happen today it will happen Monday.

Crap, I forgot today is Friday! I was really looking forward to watching the DOW tomorrow. It's more exciting than the best TV drama money can buy

 

[First]

Originally posted by: GodlessAstronomer

Originally posted by: Evan Lieb
Sharp swings and volatility like this are a great indication in that, historically, a market calm and recovery follows afterward (how soon is of course difficult to predict). It was definitely an interesting day and I look forward to some recovery, hopefully sometime in the near future. Certainly, this is the most volatile trading day I've ever seen.

You are so full of shit you're like a feces pinata. It doesn't seem to matter how shitty things look, you're always going to be a cheerleader for Wall St.

Sorry I hurt your feelings kiddie.

 

[StageLeft]

Originally posted by: mxyzptlk

Originally posted by: PC Surgeon

Originally posted by: Evan Lieb
Sharp swings and volatility like this are a great indication in that, historically, a market calm and recovery follows afterward (how soon is of course difficult to predict). It was definitely an interesting day and I look forward to some recovery, hopefully sometime in the near future. Certainly, this is the most volatile trading day I've ever seen.

Except that we haven't had a situation like this in history before.

http://chronicle.com/temp/repr...wmtpc4b6h07p4hy9z83x18

I found this on another forum and it seemed eerily familiar.. Housing/development bubble and mortgage crisis. Interbank lending drying up leading to banks failing for lack of credit. Cheap goods coming from america destabilizing the existing european markets.

Interesting but I'll need to read more about it...

 

[First]

^ This is far closer to the 92 housing bubble than anything approaching the depression, which was a far-reaching depression that touched every industry and facet of life. The likelihood of a depression is far far lower now that we know we're guaranteed dollars from the Federal Reserve to grease the wheels of credit markets. 1992 was significantly worse than what we're seeing so far in that back in that recession you had significant GDP contractions and major housing price drops (bigger than the ones we're seeing right now, especially here in CA). What we're seeing today is panic based purely on fear and uncertainty, and today it was volatile panic, which indicates to me that investors have psychologically gone from assuredly bearish to undecided bull/bears. This is in part due to reducing key interest rates, both at the Fed and abroad coordinated with other countries. This somewhat better outlook is possibly due to FDIC deposits being insured up to $250K as well as MMF also being insured. Reducing risk is a big deal and I think people will slowly start to ease their foot off the gas and realize that reality. That's a very general interpretation, but normally this type of extreme volatility is a good sign for a recovery within the next year instead of the next 3-5 years.

 

[Thump553]

We ended up about where I hoped, but I'm not as confident that this is a sign of recovery as I was earlier. The volatility is still insanely high. The market won't get much but day traders and forced redemptions by funds until it settles down a bit on the wild swings. The Dow swung in a range of about 1000 points today, and several of the swings were very rapid.

 

[Nocturnal]

Originally posted by: Eeezee

Originally posted by: Jawo

Originally posted by: Nocturnal
There's about an hour 45 mins left. I think there's a chance that we see it dip below 8000

Well if it doesn't happen today it will happen Monday.

Crap, I forgot today is Friday! I was really looking forward to watching the DOW tomorrow. It's more exciting than the best TV drama money can buy

I've been getting up extra early just to tune in to the Dow hahahaha. In all seriousness, there's nothing that's been getting me up this early, not even work hahahahha.

 

[Engineer]

I thought we were going to get to retire this thread....guess not.

Down over 500 again. Lost over 60% of the gains from Monday. 8,788 and falling...

 

[StageLeft]

As i saw on one of the various shows, though, after a big bear, recovery very predictably consists of a fairly substantial rally, then another fall before the final rally. I thought if this has happened a lot, surely everybody knows about it and it couldn't happen again, right? Well, we're in that second drop now. The question is whether the next rally is the real one or we keep on falling and the rally on Monday was based on an artificial bottom.

If the credit situation can mostly get sorted out and the ONLY thing we're looking at is a decently lengthy recession, well it makes no sense for the market to drop much further or hang this low for too long. Only, I think, in the face of a true depression would its current valuation really make sense.

 

[bamacre]

Maybe instead of boon he really meant boom.

 

[Lemon law]

Originally posted by: Engineer
I thought we were going to get to retire this thread....guess not.

Down over 500 again. Lost over 60% of the gains from Monday. 8,788 and falling...

-------------------------------------------------------------------------------------

I am expecting a slow and steady slide, a rally every once in a while, but Bush, Paulson, and many others are saying its going to be a slow process in terms of fixing the economic mess.

In terms of fixing the mess, we don't even know how badly its broken yet.

Nor is anyone really formulating the financial reforms and regulatory steps needed to prevent a recurrence of the problems.

We are still at the triage phase now.

But this package will lose public support very fast if any more golden parachutes or rip offs are pulled by top execs.

 

[Dissipate]

Originally posted by: Skoorb
As i saw on one of the various shows, though, after a big bear, recovery very predictably consists of a fairly substantial rally, then another fall before the final rally. I thought if this has happened a lot, surely everybody knows about it and it couldn't happen again, right? Well, we're in that second drop now. The question is whether the next rally is the real one or we keep on falling and the rally on Monday was based on an artificial bottom.

If the credit situation can mostly get sorted out and the ONLY thing we're looking at is a decently lengthy recession, well it makes no sense for the market to drop much further or hang this low for too long. Only, I think, in the face of a true depression would its current valuation really make sense.

As I said before, the rallies that the market has had have been due to government announcements on what the government is going to do to fix the markets. But the government can't fix the markets, because it was the one that messed everything up in the first place. Now they are just dumping a ton of money and credit into the system and Wall Street thinks this will solve the problems, but it won't.

 

[dullard]

Originally posted by: Skoorb
As i saw on one of the various shows, though, after a big bear, recovery very predictably consists of a fairly substantial rally, then another fall before the final rally. I thought if this has happened a lot, surely everybody knows about it and it couldn't happen again, right? Well, we're in that second drop now. The question is whether the next rally is the real one or we keep on falling and the rally on Monday was based on an artificial bottom.

In pretty much every fall in history, there were two bottoms. This much is true. But, what you failed to point out in your quote above is that the bottoms are not spaced by a few days, but by a few months. For a good example, the stock market started rising after the Sept 2001 fall. However, it fell to its real second bottom in late 2002! Don't get fooled by a second bottom now.

Also, stock markets almost never soar UP in a rising market (instead, they cautiously go up). In history, most big gain days were in the midst of a falling market. The recent big gain is therefore a great sign that we are still falling.

If the credit situation can mostly get sorted out and the ONLY thing we're looking at is a decently lengthy recession, well it makes no sense for the market to drop much further or hang this low for too long. Only, I think, in the face of a true depression would its current valuation really make sense.

Take a look at this and tell me that the 8700 DJIA valuation doesn't make sense. We are finally at what we SHOULD be once we finally and fully take away the non-sensical 1990s boom. Crap, it just fell another 100 points since I made that picture a few minutes ago.

 

[StageLeft]

dullard your picture presumes a constant rate of increase in the DOW being appropriate, though.

It is telling, however.

Today was a terrible day. 7.9% drop at close, I think, 700+ points down for the day. It is seemingly ALWAYS this final hour when the real bad stuff happens. Or good, but generally bad these days.

 

[dullard]

Originally posted by: Skoorb
dullard your picture presumes a constant rate of increase in the DOW being appropriate, though.

Yes, the picture is a simplification of real events. The averages (such as the DJIA) are under the influence of several factors.

(1) Investor population increase, as the number of people grow, so generally do the number of investors with the exception of really extreme times that attract/scare some investors. Population grows exponentially, and so should their investment in the limited stocks in those averages. Thus, the stock shares should grow exponentially (supply of DJIA stocks is basically fixed, thus exponential growth in demand gives exponential price increases).
(2) Inflation increases prices exponentially. This includes prices of the stocks (and usually profits of those companies). As money becomes less valuable, you need more of it to buy the same share as before. Thus, stock prices should grow exponentially at approximately the rate of inflation. Note, this is in addition to the population growth.
(3) Technology increases profitability exponentially. Stock prices should thus rise exponentially to accomodate for this productivity growth. This is in addition to population and inflation stock price rises.

Thus, the base of stock prices should grow exponentially (linearly on that graph).

(4) Finally, booms and busts are overlaid over the exponential growth. You can see the 1920s and 1990s booms on that graph. You can see the great depression and the effect of high oil prices (and associated problems) in the 1970s.

The amazing thing is that #4 here is a minor oscillation in the grand scheme of things. With the exception of the depression, stocks did poorly by staying flat and letting the exponential rise catch up rather than actually falling. On this scale, our drop right now is just a blip. We are still basically flat since the year 2000. We are finally getting out of the over-valued phase that we've been in for nearly a generation.

 

[Special K]

Originally posted by: dullard


(1) Investor population increase, as the number of people grow, so generally do the number of investors with the exception of really extreme times that attract/scare some investors. Population grows exponentially, and so should their investment in the limited stocks in those averages. Thus, the stock shares should grow exponentially (supply of DJIA stocks is basically fixed, thus exponential growth in demand gives exponential price increases).

The population will not grow exponentially forever. In fact, the rate of population growth has already started to slow from its peak of 2.19% in 1963. The wikipedia source predicts that the world's population will peak in 2075. That obviously gives several more decades of growth for young investors, but to say that the population always grows exponentially and will continue to do so is incorrect. See this link:

link

See the third graph from the right in the set of 4 graphs under the "Rate of increase" heading.

 

[CyberDuck]

Originally posted by: Skoorb
As i saw on one of the various shows, though, after a big bear, recovery very predictably consists of a fairly substantial rally, then another fall before the final rally. I thought if this has happened a lot, surely everybody knows about it and it couldn't happen again, right? Well, we're in that second drop now. The question is whether the next rally is the real one or we keep on falling and the rally on Monday was based on an artificial bottom.

If the second bottom is higher than the first one it might be over. If it's lower it's likely to continue down (after a second smaller bear rally).

Btw, if "everybody" knows its likely to happen it will happen - not the other way around as you suggest. There where also gaps in the graph (opening higher than previous day's close) a few days ago. Such gaps is almost always closed within a short time.

 

[dmcowen674]

OP needs to update Title to 8500

 

[blackangst1]

Originally posted by: dmcowen674
OP needs to update Title to 8500

He's following your lead of NOT changing titles and being intentionally misleading

 

[StageLeft]

Bush to give pep talk today

Great, watch for the markets to go down again, happens every time.

 

[Budarow]

The economy and stock market is going to continue to drop and NOT come back for a LONG, LONG, LONG time. To the best of my knowledge, there is NO time in recent history which equals todays scenario. Even the crash of 1929-1933 can't compare. We didn't have $10T in debt, most of our jobs (first it was manufacturing and now it's the better paying, white collar technology jobs) going to 3rd world countries, the largest entitlement program in human history (Social Security) growing at exponential rates (12,000 peeps turn 60 years old EVERY day which means in 2 years 12k will be able to collect SS), and a LONG-TERM expensive war with no end in sight.

And the crash of 1929 didn't "rebound" until 1954 (i.e., $1 in the DOW was worth ~$0.18 in 1933 and was worth $1 in 1954, plus an average dividend of 5.5% which was better than the 3% you get now).

So count your loses now and move on or watch your 401k continue to shrink to ~1/2 of where it is now.

Just my opinion, but shorting the market appears to be the only way to make any money in the stock market.