Another Triple Digit DOW Down Day

August 1, 2007

Four of the last six business days has seen the Dow down triple digits and I’m not talking slightly down. Today the Dow tanked 146 after losses of 208, 226, and 312. That’s down 892 points. Or you could look at it like this. Go back tow more trading sessions and you find a 5th triple digit down day (down 149) to make it a total of 1,039 points down. And, on the same Friday, the 20th, I wrote (you can go back and read the archives), about how the market was way oversold and due a MAJOR SELL OFF. Well, it’s happening! One of the reasons I gave was, “Housing is tanking, two hedge funds have been declared insolvent…” And guess what we learned on Tuesday?

American Home Mortgage Investment Corp. shares plunged 89 percent after the lender said it doesn’t have cash to fund new loans and may have to sell off assets. Investment banks cut off credit lines, leaving American Home without money yesterday for $300 million of mortgages it had already agreed to provide, the Melville, New York-based company said in a statement today. It anticipates $450 million to $500 million of loans probably won’t get funded today.

How do you spell bankruptcy?

Consumer confidence hit a six-year high in July, a widely watched gauge of sentiment showed on Tuesday, as Americans shrugged off falling home prices to focus on a healthy jobs market, instead. How can the Dow fall on a day when consumer confidence reached a new high?

Answer. We’re delusional, irrational, and ill-informed.

The Dow Jones Industrial Average erased a gain of 140 points and fell 146.32, or 1.1 percent, to 13,211.99. The S&P 500 slipped 18.64, or 1.3 percent, to 1455.27. The Nasdaq Composite Index slumped 37.01, or 1.4 percent, to 2546.27. Anyone invested in the market is struggling because their portfolio is underperforming and they are wondering how long this is going to last,” said Sam Rahman, who oversees $1.3 billion as head of U.S. equities at Baring Asset Management Inc. in Boston.

Written by Ernie · Filed Under Daily Commentary