Wednesday, July 09, 2008

Breakdown

Markets tanked again today
- DOW closed down 236
- S&P 500 down 29
- NYSE down 144
- NASDAQ down 59



DOW


S&P 500



NYSE



Note: NASDAQ (below) is the only index listed here that hasn't busted through its earlier year low, but it's only a matter of time.



NASDAQ


Looking at the charts above, one would have to assume the Plunge Protection Team has a real problem on their hands. The last vestige of a propped up pillar of consumer/economic confidence is ready to tumble, and the breakdown is here.

Closing Note:

For those of you who don't know, the NASDAQ lost ~ 80% of its value between 2000-2002. Hitting a peak intraday of 5,132 reached on March 10, 2000 and an all-time low of 1,114 in October 2002. While not as bad, the S&P 500 lost ~ 50% during the same period and the DOW ~ 40%.

To combat the deflationary ills caused by collapsing equity markets, Alan Greenspan spawned a new inflationary cure -- The HOUSING BUBBLE.

Now, this new (BIGGER) bubble is popping and the contagion is spreading globally... Could this crisis spur a similar 80% meltdown in the S&P and/or DOW in the coming months/years ahead? Personally, I don't think it's out of the question...

Looking at it from a different (lighter) perspective: Even if we took the smaller 40% haircut (from the above "prior loss" examples) this time around, we'd still be looking at a DOW in the 8K range and an S&P index in the 900's.

Regardless, it looks like the markets are finally waking up to reality and the ultimate outcome does not bode well for our economy, our country, or our way of life.

Hold on to your hats, because life will soon become far more difficult for millions of Americans.

Best Regards

Randy






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