Monday, October 06, 2008

Monday Morning Musings

The market is back under severe selling pressure this morning on the heels of big losses in foreign markets. The fear is now that there will be more financial bailouts needed in Europe, as the credit crunch takes its toll overseas.

Most foreign stock indexes fell -5%, and some even more than that. Our markets are down significantly right now, with the Dow dipping below the 10,000 level. Crazy.

The dollar is up again today, as is gold. Both are viewed as safe havens when investor confidence is shaken. Concerns about global growth are hitting oil prices again, pushing crude prices below $90.

Libor rates have only eased very slightly, while our 10-year yield is down to 3.48%.

The VIX has soared to its highest level since October 1987. It spiked nearly +20% today to hit 56.32. This is a level I did not think I would ever see, and shows there is true panic out there. The NYSE also showed an all-time record number of new lows (I have heard), at something like 1499.

I have raised some more cash, just to get through this period. I bought a couple of trading positions last week, but was quickly stopped out. Stop-losses are key in this market.

We need some sort of catalyst for a reversal. Many are calling for a coordinated global rate cut. The ECB has their key rate at 4.25%. What are they thinking? With the market this oversold, and the VIX at record highs, we could see a pretty strong snapback. I know it feels like the markets will never rally, but that is usually how it feels near the bottom.


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