Will the DJIA drop below 10,000 This Year? (10/6 Update: Welcome back, 2004!)

I'd like to argue no, but ...

The DOW had a peak of 14,280. In the last year, the low has been 11094.

11094/14280 is 77.69% or a drop of 22.31%.

9999/14280 is 70.02% or a drop of 29.98%.

29.98% - 22.31% is 7.67%.

7.67/22.31 is 34.38%.

In order for the DOW to hit below 10,000, the DOW would only have to drop another 34.38% more than it already has dropped.

In order for the DOW to stage a comeback, you would need to see...

The Dollar rebounding against the Euro. Not happening. http://finance.yahoo.com/currency/convert?from=USD&to=EUR&amt=1&t=1y

The price of oil would need to be dropping. Not happening over the long term.
http://news.yahoo.com/nphotos/slideshow/photo//080708/480/5ea9fd9dcfeb4efb8376595351b72713/

The housing market needs to stablize or recover. Not sure if it is happening.

Unemployment needs to be going down (to fuel spending). Not happening.
http://money.cnn.com/2008/07/03/news/economy/jobs_june/index.htm

I don't see a black Monday event coming, but I don't see growth either.

So, I'll say yes.
 
Yes. Maybe down to 7000 or so by 2010-11

%50 retracement from the top(14k) wouldn't be out of place.
 
Last edited by a moderator:
FoC pretty much laid out what I'd say though I think the housing market needs to fall a bit more before recovering.
 
This year? I don't think so. The dow is sort of leveling out right now. The dollar seems to be going back and forth lately with its foreign competitors. Oil probably hit its' peak ($140.XX) as your seeing demand drop somewhat. If it goes below 10,000 it'll be during the September-October months, and that'll really depend on who's leading the Presidential race and by how much.

I'm not really certain of past economic trends tied to President races and what means what there so I'm not sure what it would mean.
 
I don't think so. I think the stock market is overly pessimistic right now and has priced in the worst case scenario in most stocks. Most corporations have lowered forecasts to the point that they should meet or exceed them by next quarter. I think eventually the market will come around and realize that there are lots of blue chips at bargain basement prices and there will be price support for the DOW at around 10,000. It's actually a good time to get into the market in my opinion.
 
Last edited by a moderator:
[quote name='dopa345']It's actually a good time to get into the market in my opinion.[/quote]

Absolutely. Mutual funds based on stocks are long term investments.

Over ten year periods, I believe the stock market has always made money. Over five year periods, I believe the stock market has made money greater than 90% of the time.

Dave Ramsey said it on a daily basis on his radio show.

The best time to enter the stock market is after major drops.
 
The DOW has formed what looks to be a "head and shoulders" top. If this technical pattern plays out, it points to the DOW testing support at roughly the 10k level.

Personally, I don't like to follow the DOW since it is only 30 stocks and not evenly weighted. The S&P is a much better index to follow. The 1200-1225 area has been my downside target on the S&P since the reversal late last year. We should see strong support in this area but if that fails then the 1150 is the next area of strong support.

However, we are so incredibly oversold at this point and short interest across the major indexes is so high that we could see a massive short covering rally at the first sign of any positive news regarding the financials or housing.

I also disagree that the market at current prices has priced in all the bad news. Even with current prices the markets are pricing in HUGE gains in earnings in Q4, based on earnings growth expectations for the S&P 500. Those expectations are going to have to come down dramatically and that will certainly be yet another headwind for this market to overcome.

But up or down, the volitility in this market is just fantastic for the active trader.;)
 
Last edited by a moderator:
Certainly a good idea, especially if you are trying to bottom pick some of the beaten down financials. Go long the individual names and buy some downside protection through the options market.
 
[quote name='RAMSTORIA']instead of just saying bump you could have said like dow went below 11,000[/quote]

I could have, but everybody knows that already.

I see the Fed offering to lower the interest rates again hasn't sparked a rally. Perhaps the well has run dry.

...

Just hoping the house will sell soon or the massive wind damage in my area ripped off the roof and we'll get 6 inches of rain.
 
[quote name='BillyBob29']The market obviously cares far more about the fate of AIG than anything else right now.

Here comes another bailout![/quote]

What would be the next domino to fall after AIG? Is there anything left?
 
All I know is I love the wording when the Fed creates more numbers in the world banks computers. "The Fed today Injected 70B of it's reserves".

Classic.
 
Hard to say if it touches down to 10k, most/all of the 30 stocks are trading below fair value and with most of the uncertainty already built into the price.
Adding to the murkiness is whether aig will even be a part of the djia in a month's time.

It's more unlikely than impossible, but either way it's also a lot more symbolic than anything.
 
[quote name='thrustbucket']All I know is I love the wording when the Fed creates more numbers in the world banks computers. "The Fed today Injected 70B of it's reserves".

Classic.[/quote]

I wonder how many more billion of reserves the Fed has left.
 
[quote name='vherub']Hard to say if it touches down to 10k, most/all of the 30 stocks are trading below fair value and with most of the uncertainty already built into the price.
Adding to the murkiness is whether aig will even be a part of the djia in a month's time.

It's more unlikely than impossible, but either way it's also a lot more symbolic than anything.[/QUOTE]

I don't buy that the "uncertainty is built into the market" simply because things are changing so fast and the fact that markets reacts drastically to ever new tidbit of information reported by the talking heads on CNBC.

Also, what is "fair value?" Everyone that I hear mention that terms gives a different answer. Given the state of uncertainty not just in the US economy but in the global economy, it is really hard to determine what fair value is for most of these companies. We are seeing a massive re-pricing of risk and deleveraging on a global scale and just like how the markets always overshoot on the upside during a bull market, we will surely overshoot on the downside.

From a technical perspective, seeing the Dow retest 10k looks like of a matter of when, not if. I'm personally in the camp of an oversold rally after we get clarity on AIG but the longer term trend will remain down.

LOL @ over 1 billion shares of AIG trading today. Around 60% of total NYSE volume.
 
Market down 449 points. 10,609.66.

I wonder how futures will do.

I know, we need another $100 billion injected into the economy. That'll fix everything!
 
[quote name='GuilewasNK']Down 400 now.

We may see it below 10,000 this week at this rate.[/quote]

This morning all I heard was "up today for sure"

I guess not...
 
Dropped roughly 950+ points in 2 days, only 609.66 points to go!

I'm guessing this is it, the bubble has burst. A couple more months and the destruction might start to settle down and set everyone on an equal plain again. You know, assuming you already haven't been washed away.

~HotShotX
 
[quote name='HotShotX']Dropped roughly 950+ points in 2 days, only 609.66 points to go!

I'm guessing this is it, the bubble has burst. A couple more months and the destruction might start to settle down and set everyone on an equal plain again. You know, assuming you already haven't been washed away.

~HotShotX[/QUOTE]

i say this is just the tip of the iceburg

anyone noticed the Fed left the interest rates alone, knowing that dropping these anymore wont do any good. What are they going to do when the depression hits and the interest rate is 0%

they know this is just the start and they know they are going to need those 2% rate drops when all hell breaks lose i say between Nov and march.


We wont see a bounce till we hit 7800 pts or lower..

is this the same way this happened in 1928.. Government bailing out companies and keep pushing FAKE money into the market
 
I think 7800 is to extreme. We will see strong support at the 10k level and we are overdue for a big short covering rally at any given moment.

We happens if/when we test that 10k level will tell us if this is just the beginning.

I do agree about the interest rates though. They didn't cut because low rates haven't helped so far and at this point another .25/.50 wouldn't have helped the problems. I also agree that they are probably thinking about what if things get worse.....yes it could get much worse....they will need that 2% to try and save the last shred of consumer/market confidence that is left.
 
[quote name='dopa345']I still say no lower than 10,000 but it's starting to cut a little close.[/QUOTE]

Quoted for Monday. That's the day I pick.
 
Student loan debt + six years of grad student wages means not only do I not have fuck-all invested, but any superfluous money I earn goes to whittle down my six figures of debt.

I know I'm fucked already. I was fucked when the dow was at 14K. Will I be any more fucked now?

Probably. But, you know, while getting hit by a train is worse than a punch in the face, neither are particularly pleasant.

I have a paltry sum in social security, and I signed up to invest in my retirement via TIAA-CREF (which is standing for the moment).
 
[quote name='mykevermin']Student loan debt + six years of grad student wages means not only do I not have fuck-all invested, but any superfluous money I earn goes to whittle down my six figures of debt.

I know I'm fucked already. I was fucked when the dow was at 14K. Will I be any more fucked now?

Probably. But, you know, while getting hit by a train is worse than a punch in the face, neither are particularly pleasant.

I have a paltry sum in social security, and I signed up to invest in my retirement via TIAA-CREF (which is standing for the moment).[/quote]

Well I hope you make out OK, I've got a feeling you will in the end.

I'd care less about the mess if I didn't know the rich were laughing about it over cocktails. I mean, McCain didn't even realize there was an economic problem until recently and the guy is running for President. If he's out of touch, imagine how oblivious the run-of-the-mill millionaire is.
 
[quote name='mykevermin']But that's inevitable in virtually any financial crisis, no?[/quote]

These days that's true. My folks told me stories about communities banding together to create businesses, create jobs, and ride out tough times together. I don't think that's just mythology, I think there's some truth under these stories and I think those times are gone.

I also think that a true depression in these modern times would be nastier and more desperate then any of us imagine. It comes from the feeling I get when I listen to those infamous Enron trader tapes or notice that the only salaries that are steadily rising anymore belong to politicians and CEOs.
 
[quote name='camoor']Well I hope you make out OK, I've got a feeling you will in the end.

I'd care less about the mess if I didn't know the rich were laughing about it over cocktails. I mean, McCain didn't even realize there was an economic problem until recently and the guy is running for President. If he's out of touch, imagine how oblivious the run-of-the-mill millionaire is.[/QUOTE]

It's unlikely anyone is laughing about this over cocktails. Warren Buffet was caught by suprise and knows little about OTC derivitaves as well.
 
It's official kids, Dow's below 10,000. It'll probably just make it back over by the end of the day's trade, but there it is.

CNN.com

Dow Jones Industrial Average
9,932.00 -393.38 / -3.81%
Oct 6 10:32am ET †
Open: 10,317.26 High (day): 10,322.76 Low (day): 9,912.73 YTD%Change: -25.13% Volume: 85,077,818.00 Prev. Close: 10,325.38 52-Week Range (Low - High): 10,310.25 - 14,198.10
 
Check out the cover of this week's "The Economist"..

Economist.jpg
 
A few sources are saying that banks are secretly in discussions about a world-wide bank "holiday". Meaning a total shutdown/freeze for a few days or a week.

Watch tomorrow carefully. More than one source says something happens tomorrow (Tuesday).
 
You must log in or register to reply here.
bread's done
Back
Top