Despite the many media comparisons to 1929, the present environment is entirely different now. The existence of G-7 central banks and the logical expectation of concerted actions, repeatedly if necessary, presents an entirely different environment than the stock market crash that led to the Great Depression.

Unfortunately, there are never any guarantees. In retrospect, the decision to allow Lehman Brothers to fail set off a chain of events that led us to the precipice. More mistakes may be made. Clearly, even the best outcome is going to require a very long time and things won’t quite ever be the same. The most acute caveat is that the derivative time bomb is still ticking, even after the damage wrought in recent weeks. “The Great Unwinding” we warned of in our January ‘08 Pictures Of A Stock Market Mania update (see http://www.cross-currents.net/archives/jan08.htm) continues and the secular bear market will likely persist for another two years.

However, there are signs that a powerful bear market bounce is likely to commence, perhaps as soon as Monday. Everywhere we look, we see indicators as oversold as we have ever seen and sentiment measures are indicating extreme fear. While bear market rallies can be very powerful, what occurred intraday on Friday was extraordinary. At one point, the Dow had gained 860 points (10.7%) in only 40 minutes. While we can make the case for frantic short covering, Dow 8000 presents a wholly different valuation picture than Dow 11,000. We are beginning to see some solid valuations amongst individual stock issues.

At this point, our most likely scenario is a very short term move to the upside before a retest of last week’s low later this month. At Monday’s average price for the first half hour of trading, we will initiate Microsoft Corp. (MSFT) as a 10% long “idea” in the Trading Stance feature, with a $2 “stop.” It is entirely possible we will close MSFT out before the end of the week.

http://marketwarnings.blogspot.com/2008/10/aig-knew-of-possible-problems-with-cds.html

At 1:49PM blogger called for the buying. Sometime later fireworks!

Article title and URL are:

“Stock Market Crash 2008 Ended Today 10-10-2008: Back to normal trading (We are at lunch time now on 10-10-2008″

http://financialtraders.blogspot.com/2008/10/stock-market-crash-2008-ended-today.html

This important trendline was definitively broken when the S&P 500 broke below 1200, and after that the market started plummeting. The inflation-adjusted index is now 25% below that trendline.

The inflation-adjusted index is also now 4% below the inflation-adjusted value that it had at the bear market bottom of October 2002.

For a chartist, these are very worrisome findings. On the chart the next place where there is price support (i.e., an area on the chart where the market spent a lot of time) is at the inflation-adjusted value for January 1995. The inflation-adjusted value for this area of support is 690 +/- 30 (i.e. 660 to 720). On an inflation-adjusted chart, there is no area of support between the current value and the January 1995 inflation-adjusted value.

This suggests to me that the index will eventually fall to an inflation-adjusted value of 690 +/- 30. It can do this by falling, being eaten up by inflation, or some combination of the two. If it does fall to that inflation-adjusted level, it can occur over a period ranging from days to years.

To reach 690, the inflation-adjusted S&P 500 will have to decrease 23% below its current value of 899.

You’re too generous. For Cramer, it’s too little, too late.

The reason was that many businessmen pledged equity in their companies as collaterall for the loans thay took to invest in some other business and there unable to meet margin calls due to credit crunch.

So a new category of players emerged – banks who do not give a shit about the level of the market, they just dump the collaterall.

I do not know if you have this kind of leverage an loans in US, but it’s is true that more advanced economies have higher leverage. So let’s hope this will not get to extreeme.

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BR: The Dow was down over 80% in 1929-33. Thats why 29 was worse.