Market Meltdown!

January 22, 2008

How low will the Dow go this Tuesday? Having escaped Black Monday, thanks to the Martin Luther King, Jr. holiday, investors could only sit and wait, and worry. Do they place SELL orders before the opening today, or do they wait and pray that the bottom doesn’t fall out? For two days straight now, international markets have tanked anywhere from 5-10% over two days.

Global stock markets extended their shakeout into a second day Tuesday. A U.S. recession seems near impossible to stop now and that will cause a worldwide economic slowdown. The dramatic declines were expected to spread to Wall Street, where stock index futures were already down sharply hours before the trading day began.

Here are some examples.

Japan’s Nikkei 225 index, the benchmark for Asia’s biggest bourse, skidded 8.3% in morning trading to 12,738.31 over the last two days. The Hong Kong’s Hang Seng index was down 10.7% over the last two days. “Unless we get some positive ‘shock effects,’ such as drastic measures from the U.S. government, there is almost no hope for a recovery in stocks,” said Koji Takeuchi, senior economist at Mizuho Research Institute in Tokyo.

Wall Street future prices were down sharply, portending a plunge when trading opens today. Dow Jones industrial average futures were down 436 points, or 3.6 percent, at 11,670, while Standard & Poor’s 500 futures were down 57.1 points, or 4.3 percent, at 1,268. The only question is how far DOWN the market will CLOSE, not OPEN.

So, I ask again, is Dow 6,000 possible in 2008?

We all knew (except OPEC and Chavez) that $100 a barrel oil was not sustainable. And neither is the current $87 price tag. People simply cannot afford $4 a gallon gasoline. And there was a reason gold had topped $900 an ounce, and there’s a reason it has fallen $40 in two days. There’s always reasons, but trying to figure them out accurately is the hurdle.

One thing stands out for sure though. Life has its ups and downs. Governments and politicians will always try to negate nature and play god. People get elected on the basis that they’ll see to it that things will be better. NEWSFLASH! Things don’t always get better, and better, and better. The current market meltdown is just one such example.

Written by Ernie · Filed Under Daily Commentary