WTF just happened?

Okay, our Dow 10,000, 9500 and now our Dow 9,000 targets have been hit.

Where do we go next — are we close enough to a bottom to buy, or are we heading much lower? 

Dow is now off 39% from its highs.

~~~

This cascading waterfall selloff is ugly. Next key level of support is 8750, where we would again be buyers of the market.

If that does not hold, then we are looking at no support until the 2002 levels — about 7250. (I may have to dust off that Dow 6,800 call).

As we noted earlier, tomorrow is that huge Lehman derivative settlement, and I wonder how much of this action is due to that.

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

256 Responses to “Dow 8579”

  1. NY Stock Guy says:

    Somebody owes me 20 bucks!

    ———

    How long till we get to Dow 9,000?

    I have $20.00 on Halloween 2008.

    Who’s with me?

    Posted by: NY stock guy | Sep 18, 2008 1:45:22 PM

  2. matt_ny says:

    Massive selloff of bank stocks. Take your pick, short selling or divestiture due to government purchasing prefered stock and diluting shares.

  3. AGG says:

    Paridigm shift. The tectonic kind.

  4. NY Stock Guy:
    You were 20 days off. ;-)

  5. NY Stock Guy:
    You were 20 days off. ;-)

  6. Jeff M. says:

    The slo-mo train wreck continues, although it’s not so slo-mo anymore……

    How many big down days can we see in a row before buyers step in?

  7. IdahoSpud says:

    Heya Barry, are you still getting crap for your call of DOW 8700 in 2005/6? As far as I can see, you were only off on the timing, not on the reality or the mechanics.

  8. Jerry says:

    Does anyone seriously think DOW 9k is the floor? C’mon….

    Wait till next week, when company after company reports sh$tty earnings…

  9. tm says:

    Markets over react only after they have reacted enough…
    We have lower to go… I’m just surprised it is happening this fast…

  10. Jay says:

    8000 test (knock on wood!)

  11. jeff says:

    Well, I certainly thought that we would have had a snap back rally by now. Now I’m afraid that any rally will be sold into big time.

    Having said that, it’s probably time to start nibbling, IF you have any powder dry!

    Rhyno

  12. Empire says:

    Ladies and Gentlemen, mark your calendars:

    This was the week when Barry Ritholtz was insufficiently bearish…

  13. jeff says:

    Well, I certainly thought that we would have had a snap back rally by now. Now I’m afraid that any rally will be sold into big time.

    Having said that, it’s probably time to start nibbling, IF you have any powder dry!

    Rhyno

  14. MM says:

    Meltdown. Panic selling finally come!!!

    :)

  15. Robert says:

    Based on trading patterns (7 days negative -100 or more, additional all major crashes are proceed by a oversold market) and the events tomorrow if we are going to get a crash it will tomorrow after 2 PM. Which is the worst time cause the circuit breakers do not kick in till -2000 points.

    http://latimesblogs.latimes.com/money_co/2008/10/the-new-york-st.html
    How they work

    http://georgewashington2.blogspot.com/2008/10/whos-got-biggest-derivatives-exposure.html

    In Puts (far from the money) OCT 18
    All the top 10 for CDS exposure.
    Calls on GOLD and FCX.

  16. Kevin says:

    Didn’t Hank and Paul tell Congress we’re days away from economic meltdown? And that was 2-3 weeks ago. Not a good sign that it could be 2-3 weeks before TARP goes into action.

    The world is falling apart and I don’t see the anything preventing DOW 7500.

  17. jhunt says:

    still seems to be too much complaceny in the markets…

    no real fear, no real blood in the streets as the saying goes.

    i dont think this is the bottom, so figure a target of 8500 if we close at this level. though ya never know…

  18. Phil says:

    This is the markets’ response to a Swedish style recapitalization? Perhaps they don’t want be saved.
    Martyrdom for all.

  19. batmando says:

    WHOA, BARRY!
    There are a lot of smart commenters hereon (not including YT). The rest of us look to see their input, BUT also expect to see you take the lead and offer your insight (please); else say you too haven’t the faintest eff’ing idea, which we know you do, or at least an informed opinion.

  20. R. Timm says:

    I posted on here I expected a big relief rally and a 50 point fed cut. I got the fed cut, but no rally. I sold my SDS at 87 Monday during the big drop as I was scared we’d have a huge bear market rally. Kicking myself now that SDS is at 104!

    I’ll sit on the sidelines until I see some upside direction. Fool me once… you know the saying. S&P 500 bottom in the low 800s looks possible.

  21. ib says:

    Stop fishing.. let it go. The picture says it wants to test that 7,500 area. Even them I am not buying til I get some confirmation. This is one bottom I am definitely not going to try and get.

  22. Ladies and Gentlemen, mark your calendars:

    This was the week when Barry Ritholtz was insufficiently bearish…

    Best and funniest line I’ve heard all day. ;-)

  23. Ladies and Gentlemen, mark your calendars:

    This was the week when Barry Ritholtz was insufficiently bearish…

    Best and funniest line I’ve heard all day. ;-)

  24. MW says:

    Gold and the Dow to cross at 5000.

    Bet on it.

  25. AGG says:

    If the market really is “forward looking”, then it’s going to be a long cold kondriateff winter.

  26. Steve Barry says:

    I’ll stick with what I predicted here on 1/2/2008:

    The 10 day put call is around .95…long way to go to 1.3 which is a clear buy signal. For 6 months now, anytime QQQQ daily volume rises, the index drops like a rock. The market is rotten to the core. Short interest for the big QQQQ names is nonexistent. From Hussman’s site, S&P revenue was 940 per share last year…that is going to drop this year, conservatively to 900. Apply a historically high P/S of 1 to that and the S&P trades at 900. I see 2008 as potentially the worst year in S&P history, which is down over 43% (1931).

    Posted by: Steve Barry | Jan 2, 2008 3:41:05 PM

    Anybody want to bet against it now? Barry, since I am probably the only person in America who said this might be the worst year in S&P history and can document it, if I am right, I would like a blog thread dedicated to my call.

  27. Empire says:

    Hey, remember back in the beginning of ’08, when all those people were on here mocking Barry & gleefully telling us how we were going to lose our shirts, while they were going to be rich from going 100% long during the “correction”? Wonder what happened to those people?

  28. David says:

    GOod call Steve.

    I think we could hit 750-800 on the S&P.

  29. Bruce in Tennessee says:

    Barry,

    I do think that an end of week..”What are you buying and selling thread” would be useful…I doubt anyone here would be unsophisticated enough to “buy Cramer kool-aid” but it often helps me make decisions based on what others think..

    All of you know, though, that I am not invested in equities here…this just goes in the general fund of supratentorial information.

  30. Henry says:

    Not to stoke the panic or anything, but think about this:

    We have at least two countries that are basically bust. Iceland and, much more importantly, Pakistan. Considering that all the recent weekends have been quite event-filled, what might happen this weekend?

    I’m 90% in cash because I trust nothing right now. And because I sold the last of my puts a few days ago (kicking self for not holding on to them longer).

    Henry

  31. dangermole says:

    I don’t follow the DJIA so much, but am a fan of SPX for technicals. I saw a good support zone in 960-1015 which I had 50/50 for a tradeable bear rally. Since we went thru 960 I see the next real support at 800 – around the dotcom bottom. So I guess I’m saying dow 7500, too. Either way, I can’t see any logical stop points between here and there so I too won’t be trying to call this bottom. Happy to give up that first 5-10% to braver chaps.

  32. Jeff M. says:

    @Empire: They’re sh*$tting their pants right now.

  33. Dennis Kneale says:

    C’mon guys! What are you afraid of?

    In the year 2025, the S&P 500 is going to be AT LEAST 10% higher than it is now.

    Now is the time to jump in.

  34. Ritchie says:

    Empire: “Wonder what happened to those people?”

    The next time you are in a Starbucks or McDonalds, look around. No, they won’t be working there. Look for someone with an empty change cup and a sign that says: Will Bloviate For Change

  35. Eric Davis says:

    great depression have to price in the meme.

    60% correction

  36. david says:

    Hey, Barry
    Some of your wisdom needed!!

  37. AGG says:

    In a situation like this, Warren Buffet looks at the book value of a stock. Now let’s say you do that but add a twist; Since asset prices have been in a bubble, the book price may be inflated so chip 30% off the book. Finally, since we are in a recession, demand has dried up for even the important things so expect your adjusted book value to not be marketable for a while. Chip another 25% off the adjusted book and, if you can wait a while (years), by all means, buy. I had zero money in the market today. I didn’t lose a penny.

  38. Paul in NYC says:

    Looks like the Reagan/Bush smoke and mirrors have finally expired.
    It only took 25 years.

  39. AB says:

    This is beginning to look like a correction for a 30 yr-long markup. Dow appreciated at about 10% annually since 1978 to it’s 14K high. An 8% rise over the past 30 yrs would put the Dow at 8K – about where we’re headed. We’re paying for thinking we could beat the laws of economics since the ’90s…

  40. Joe says:

    What is the dow yielding? My stocks have yields better than a 10 year treasury. And these aren’t utilities.

  41. Lloyd Bridges says:

    Looks like I picked the wrong week to stop smoking crack.

  42. Gregg says:

    Every single one of these comments is bearish. Tradable bottom looks like it’s right……NOW.

  43. Darin says:

    I am a buyer anywhere under 8,000. Until then, all cash ’till the crash.

  44. Jeff Akston says:

    I could cry. I was so good and responsible being half in cash/bonds for a year and 10% short the S&P.

    But two weeks ago I got all stupidly bullish; sold half my short and went (way way way) long on financials, including Dec/Jan options which are now about 200% out of the money.

    Tomorrow is going to be ugly too. I don’t think anyone’s going to want to hold anything over the weekend.

  45. Don Luskin says:

    I am now becoming neutral on the market.

  46. Bruce in Tennessee says:

    Gregg:

    Cramer said the same thing over a month ago…

    If you are too early to the party, you may be the first one asked to leave..

  47. Mattie says:

    I so planned my vacation for November… I seriously will be pissed if the world goes to pot… I don’t want to spend my time at soup kitchen… in Iqaluit, Nunavut.

  48. Steve Barry says:

    QID nearing all-time high 80, which is also basically its all-time highs set right at its debut. If it gets solidly above that, who knows. I may sell some at 100 then the rest at 130??

  49. Mike in NOLa says:

    looks like naked short selling to me :)

    Probably a combo. Shorts jumping in. Fear selling in anticipation of the Lehman CDS auction and the shakeout of a lot of people who aren’t hedged and threw in the towel.

    Must be a huge volume. Streetsmart keeps saying it can’t connect when updating streaming quotes.

    Bernanke got any more rabbits? Hats?

    Seems like there will have to be a short covering rally around here somewhere.

  50. Phil says:

    The floor is 3241…

  51. Short Everything (except whiskey & tp) says:

    If this market falls apart to the downside during the last half hour, Friday will be a bloodbath and Monday will be worse. Good luck everybody. See you at the bottom.

  52. Short Everything (except whiskey & tp) says:

    If this market falls apart to the downside during the last half hour, Friday will be a bloodbath and Monday will be worse. Good luck everybody. See you at the bottom.

  53. txchick57 says:

    Well, I did suggest that ya’ll to build SKF positions when it went down to 88-90 a few weeks back.

    I’ve been at this 26 years and I can’t remember seeing anything like this.

  54. Watcher says:

    OMFG it’s not stopping. This week has outdropped > 10 years of market, all indicators are broken and we’re not stopping…wtf people, wtf..it’s still going..

  55. MM says:

    VIX approaching 70

  56. wicked witch says:

    I’M MELTING!!

  57. Short Everything (except whiskey & tp) says:

    Maria “Is this a crash?”

    Da

  58. Short Everything (except whiskey & tp) says:

    Maria “Is this a crash?”

    Da

  59. Reinko Venema says:

    On 10 or 12 Nov 2008 I predicted DOW to 7000 without any timescale given.

    We are now about 5000 points down that route and we have approx 2000 more to go.

    All these debt huggers will come home to roost!

  60. super-anon says:

    I’m completely in cash as of earlier today.

    I don’t have a framework within which to make predictions about this market. The best I can guess is that the system is coming apart.

    I’m just going to wait until it starts to make sense to me again.

    It’s been a great year, but I’m starting to wonder if any of us will get to keep our winnings.

  61. Dan says:

    Wonder if Gasparino has any smart remarks?

  62. NY Stock Guy says:

    Hey Bar, we just blew past yer 8750 level.

    Personally, I am not quite ready to buy much at the moment.

  63. debreuil says:

    Not to brag, but my ultra scientific chart seems to be predicting things fairly well so far.

    http://debreuil.com/temp/bubble.png

  64. anonymous says:

    Steve Barry for Treasury Secretary.

  65. Reinko says:

    Correction: Nov 2007…

    Dumb me.

  66. Steve Barry says:

    Who will be the first perma-bull to cave? Westbury? Bowyer? Kudlow? Kneale?

  67. leftback says:

    Somebody else apart from me seems to like GDX…

    I bought more at $29.65. This is insane….

    Steve Barry, can you feel the fear ???

  68. ben says:

    BR,

    By the time I got to your post were are already below 8750, should I basically assume these “support” levels are nonsense?

  69. HCF says:

    I’ve been selling my various short ETFs gradually into this the last few days. I’m kind of regretting it, which is probably the greed talking right now. I’m expecting a violent bounce up, but at this point, I don’t know what the most likely outcome is. I’m glad I’m mostly in cash at this time, with some short exposure, a little gold, and a little Swiss Franc. Maybe I should pick up some rifles on the way home? Just kidding…

    HCF

  70. mhigh says:

    Throw all the technicals out the window. They mean nothing. This is all pure panic and emotion at this point.

    That’s not to say that Dow 6000/7000/8000/whatever is not justified. I’ve always thought the equity markets were grossly overinflated to begin with. But the *way* the market is acting is in pure panic mode, so trying to justify why it’s tanking or where it’s going is not going to work – for any short run predictions, at least. Volatility is sky-high, so we’ll see plenty of wild multi-hundred swings both up and down for quite some time before it settles at some more natural level – probably not until after election day, I fear.

  71. Paul in NYC says:

    DOW close to 40% loss for one year.

  72. dead hobo says:

    Why don’t you buy something tomorrow. I think a lot of people will want to hold equities over the weekend. It’s supposed to be good luck.

    Seriously, I’m a convert. This fall is the real deal. It’ll be over when the last nuclear bomb goes off and it seems quiet for the first time in a long while. I’m hoping in about a month or two. As I wrote before, look at 2002-2003 for a reference. It might even go a little lower, depending on how much of the market was just a credit balloon in 1998 or so.

    The markets are backing up to a time when people actually worked and paper passing was a boring backroom job performed by underpaid bank clerks. To when derivatives were mostly just for currency hedging and cash flow smoothing. Maybe people will even figure out a way to support long term loans with long term liabilities, instead of matching long term loans with short term borrowings. Radical thinking, to be sure. But not a bad idea to ponder.

  73. Eric Davis says:

    If we can hit the century on the vxo…. we will be close.

    Going to have to Delevedge most of the hedge funds.

    then it will take months to rebuild confidence… Tack on a few more redemptions huh!!

  74. A drop of 400+ in the last hour? Ouch!!!! Anyone calling 7,900 tomorrow?

  75. A drop of 400+ in the last hour? Ouch!!!! Anyone calling 7,900 tomorrow?

  76. DL says:

    Steve Barry @ 3:46:46 PM

    “Who will be the first perma-bull to cave? Westbury? Bowyer? Kudlow? Kneale?”

    Kudlow first, then Wesbury, then Kneale. Bowyer is hopeless.

  77. mw says:

    Watch for the Comex and LME to default on Gold and Silver settlements…..The game is over.

    Gold and the Dow to cross at 5000..

    Be safe.

  78. JohnW says:

    Is it the Lehman unwinds as noted elsewhere causing this Thursday / Friday crash?

    Curious also as everyone moves to “cash” that there is only so much physical cash around. Sure, cash also means 1moT’s but still. Banks don’t have to keep it in the vaults anymore. The real panic will come when ATM cards get rejected at the machine itself.

  79. PureGuesswork says:

    Montier and Edwards, the 2 uber-bears from SocGen have called for a bottom for the S&P 500 around 500. I think their idea was that this was going to happen sometime in the next few years. Now it looks like it may occur in the next few weeks. S&P has fallen over 250 pts since the beginning of October, now near 900. Edwards, who is on vacation (his honeymoon!) will probably have to adjust his target. 500 seems so bullish now. Can we have negative prices for stock, you know, where instead of selling stock, you have to pay someone to take it from you?

  80. Francois says:

    Give credit where it is due. Steve Barry was correct, BR was correct, albeit early.

    Let’s remember that Fleckenstein was waaay early, but his rationale made a lot of sense then, and look almost prophetic now. He specifically used the expression “tremendous market dislocation” on Kudlow & Cramer circa 2004. he was also smart enough to say that he was among the worst market timers around.

    I wonder how it feels to be proven right when the sky is falling.

  81. Empire says:

    CNBC blaming the shorts…in a panicked, hysterical voice.

  82. super-anon says:

    BR,

    By the time I got to your post were are already below 8750, should I basically assume these “support” levels are nonsense?

    I think support levels naturally break down when the banking system collapses.

  83. Jeff M. says:

    @txchick57: I had one-fifth of my holdings in SKF, was scared out and then got back in a little in the 90′s and then 110+. Wish I had stayed in the whole time but the feds scared me out. Damn!!

  84. Scott says:

    Everytime I read Roubini I think he is a doomsday depressed individual. And now I see he is right to feel that way.

  85. RF says:

    WTF? Maybe Cramer was right at the right time. I hate being the only one not engaging in Cramer-bashing because it is so much fun, but……

    Best regards,
    RF

  86. eren says:

    is there a support?

  87. ramstone says:

    Well even as a non-technician I wouldn’t say they were nonsense. However, there has to be a point where market turns are so extraordinary that support levels — which have their basis in the past — go out the window. So, maybe inapplicable?

  88. DL says:

    That coordinated rate cut worked like a charm. (Not).

    They’re going to have to go to negative interest rates.

  89. CNBC Sucks says:

    I still maintain the Dow 7K/4K/1K scenarios (Obama/McCain/Palin). Most of you guys are traders and I respect that and have learned a ton from you. But I come from CAPM and growth and interest rates and differentiation of companies, and know nothing about support levels, momentum, tops and bottoms. As far as I am concerned, anything is possible, and we are just approaching levels where stocks are fairly priced under Shiller (not quite there).

    I understand the tough economy, tough credit, lifting of the short selling ban as factors behind the price moves this week, but I also think the Palin Nazi mob scenes are not helping the market at all. This has to be freaking out some people, because it unnerves the hell out of me:

    http://cnbcsucks.wordpress.com/2008/10/09/nothing-makes-the-market-more-impotent-than-nazi-rallies-on-american-soil/

  90. Mike in NOLa says:

    Tonight the loan to GM may get approved. Would produce a tremendous short squeeze.

    Hey, maybe it’s the auto workers union shorting GM to scare the Administration into approving it.

  91. Winston Munn says:

    I remind myself once again that the Nekkei corrected 75% during the lost decade.

  92. Tinfoil Hat says:

    Yes, I know I’m crazy.

    But it’s Yom Kippur. Al Qaeda obviously are filled with hatred for anything remotely Jewish.

    Bin Laden comes from shitloads of money and the fucking bastards get their funding from oil wealth.

    Can somebody tell me that it’s utterly impossible for terrorists to fuck with our stock markets?

  93. Truth08 says:

    I know a lot of people were expecting a rally by now and had tiptoed into the long side. The way the bottom is falling out here, this may be the panic selling that finally signals a short term bottom. Or it may continue to sink like a rock.

    I just hope this gets the people of this country to look around and realize what the hell has been going on and that it’s a systematic failure, and the system needs to be changed. But instead, we’ll probably get more bailouts and demands for tighter regulation and more artificial interest rates. And the cycle will continue. I hope this won’t be the case and we can get some real change, but unfortunately we’ll probably have to experience even more pain before we get to that level.
    The Truth Shall Set You Free – Sign of the Times

  94. Oscar WIlde-Assguess says:

    7,702 on 7/23/02…

    Take that and knock off ten percent more.

  95. Pat G. says:

    How many more trillions have been wiped out of retirement accounts? The government’s looking out for the American worker? The government could care less. Hopefully this leads to the 2nd revolution this country so desperately needs.

  96. Bruce in Tennessee says:

    This is the second time I have been spared from a huge market correction. And like last time, I just feel relief. However, the money that I make to invest, I realized long ago was too hard to come by, so when I have an inkling the market is due for a correction, I get out. I have posted on this before.

    Now as to the future, I will just sit and wait. I don’t do anything other than buy long for the market. When I am convinced we are out of this mess, I will put 100% of my investment funds back in, and go.

    I am amazed at people like Karen, Steve, Mike, Leftback, Grumpyoldvet and others who have such skill. But I am a gross market timer, have always been, and will continue to be. This time I was spared simply because it just didn’t feel right a couple of years ago.

    Now I will just continue to observe in cash equivalents…there will be a time.

    Will be buying short term callable cd’s next week…

  97. leftback says:

    “and the all-night girls, they whisper of escapades out on the D-train…”

    Visions of ZIRP. Financial ice age.

    SPX 880 should be a massive support, at some point.
    A few shorts are covering… see Mr Cox, shorting is GOOD.

    The most frightening thing about this is that we all expected this but hardly any of us expected it to be this bad or this fast. Even more frightening is that I still don’t think we have seen real out of control panic. Yet. Nikkei 80% haircut, can’t get that out of my mind. Surely a tradeable bottom soon?

  98. Alan says:

    Could it be that the PPT no longer has its friendly investment banks’ trading desks doing their thankless work keeping the market artificially afloat?

  99. Uri says:

    Barry: A few months ago you posted the “Black Swan” theory. Since, then I went all cash on my accounts. Excepts, for a trade here and there. Thank you, again.

  100. batmando says:

    Where’s the PPT now, eh?
    Maybe they just stepped in as DJI came back from below 8600?
    45% $ cash
    35% Swiss Francs
    20% CEF/GLD/SLW