Shares look set for a mighty fall

[NNN0LHI]

http://www.ameinfo.com/57929.html

The Dow Jones and Nasdaq went below their 200-day moving averages last week, a bad sign for chartists. The US consumer is beginning to stop spending and staggering under a weight of debt. Unfortunately consumer spending makes up two-thirds of the US economy. It does not look good!
After the worst week for shares this year, with Friday the worst day on record so far too, this is not a bad point to reflect on the market outlook for shares in the US markets.

This is also highly relevant to other capital markets around the world. For if Wall Street sneezes everyone else will get a cold, and even the sky-high, oil-fuelled Middle East bourses will not be immune; this could be just the thing to bring them crashing to earth.

Now US share valuations have actually been remarkably resilient in 2005. Ignoring warnings on consumer demand, plunging car sales, the phenomenal trade deficit despite a very weak dollar, and rising interest rates, stocks have held their ground. Investors have been convinced by the rhetoric of Wall Street and kept their nerve.

However, as somebody once noted market forces are like pulling a brick at the end of a piece of elastic; you pull and pull, and nothing happens; then the brick flies forward and hits you in the face.

more

[elehhhhna]

1. The Market's responding to the DEAD Social Security Privatization plan:

The valuations have been high in anticipation of a flood of Soc. Sec. into the markets, which would give stocks a short-term spike in price. Now that the plan's DOA, we'll see a HUGE correction.

[NMDemDist2]

2. i fear it's just a matter of time

if not this week, soon :scared:

[KlatooBNikto]

3. There is nothing fundamental in our economy that can make investors

feel optimistic.

On Edit: To restore optimism, Bush has to abandon his Imperial Agenda, terminate his war, rescind his tax cuts for the wealthy and repudiate Supply Side Economics.He is temperamentally and intellectually incapable of doing so.

[solinvictus]

4. Save a few bucks to invest...

If it falls, it'll be a buyers market.

[Gyre]

10. I'll be buying primers and powder

Somehow, I don't think this is going to be like the average correction since I don't see energy prices going down.

Gyre

[Zynx]

12. There are many cheap stocks out there right now.

[blondeatlast]

5. Hubby lost $4000 last week in his IRA alone, which we were planning

to cash out in preparation for his new job. Peanuts to most Wall Streeters, but an enormous hit for us.

Once people see what it's doing to their IRAs and such, things will heat up.

Let's review: Why did people hate the social insecurity plan devised by the Republicans???

Answer: How many middle and working class types lost $4000 last week???

[kentuck]

6. Good time for Democrats to point out the hazards of investing...

in the stock market and "privatizing" Social Security ?

[blondeatlast]

7. Could be. It's certainly time for the Dems to hammer the coffin shut

on SocSec reform. If they can't exploit this, then we are hopeless.

[Zinfandel]

18. Exactly! This is what Bush's Privatization of Social Security is mainly...

based on.

With Bush's plan... (Republicans, of course despise Social Security, always have, and this is their way to have access to SS and finally destroy it) ...for people's retirement income, will be at the mercy of the stock market, corporate bankruptcies, corporate fraud and government manipulation.

You think Bush and the Republicans care one bit about ex-workers who can no longer produce more profits for them?

[xchrom]

8. we live in interesting times.

the bankruptcy legislation passed just in time, didn't it?

there will probably some new lay-offs to offset pressure that some folks are feeling.

corporations can add a few more barely middle class types to the ranks of the poor -- and willing to work for less.

[LizW]

9. Lots of people like me invested last week

We had to put money into our IRAs last week before the 15th in order to get the deduction for 2004. We can't be the only ones.

I wonder what would have happened to the market if that money had not been going in?

Could it have been an even worse week?

I haven't checked to see how much money I lost from Wednesday to Friday, and I'm not going to.

:scared:

[NNN0LHI]

11. What we witnessed last week was another redistribution of wealth...

...to the wealthy. I can't for the life of me figure out why people keep falling for it? It happens over and over again but no one seems to mind too much. It must be the gambler in all of us. I keep hearing that gamblers really want to lose. I never really believed that theory until just lately. I am a believer now.

Don

[Zynx]

13. Even if it does fall sharply the next few days, it will bounce fiercely.

Bear in mind, even in serious crashes the market rebounds dramatically immediately thereafter. Think in 1929 the market went from 380 to 170 back to 300 by early 1930. The crash of 2002 is a more apt example given conditions where the market went from 10500 to 7200 in just three months only to return to 10,000 just a year later.

[Zynx]

14. As a side note, do you know how many times the Dow broke the 200

day moving average last year without consequence? No fewer than 6 times.

[NNN0LHI]

15. The Dow did not recover to 1929 heights until the 1950s

Table 1
Dow-Jones Industrials Index Average
of Lows and Highs for the Year

1922 91.0
1923 95.6
1924 104.4
1925 137.2
1926 150.9
1927 177.6
1928 245.6
1929 290.0
1930 225.8
1931 134.1
1932 79.4

Sources: 1922-1929 measures are from the Stock Market Study, U.S. Senate, 1955, pp. 40, 49, 110, and 111; 1930-1932 Wigmore, 1985, pp. 637-639.

[lonestarnot]

16. Another super volcano...

[MsTryska]

17. The Market will always fluctuate, and depending on Who's in Charge

and their policies it can fluctuate wildly. When it's like this, if you have the decades necessary - it's time to buy. It's why i chose to enter the stock market at this particular time, despite my lack of faith in g-dub.


Stocks right now are far more affordable than they were during the Clinton years. I can get much more for my dollar now than i could then, and i'll let it ride. I do have faith that eventually policy will swing back to a more sane agenda, and the dollar will get stronger. There's really no need to panic, unless you are bleeding money you can't afford to lose.


if that's the case - wait till your holdings have hit a mark close to your original buy price, if not at buy price, dump it all and put that money in bonds - US and Foreign. Actually considering the weak dollar - stick a lot of it in a forign bond fund.