Best of the Week
Most Popular
1.Gold Price Target of USD 2,300 - GoldCore
2.Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit - Nadeem_Walayat
3.Why British Muslims Are Leaving Elysium Paradise for Syrian Hell - Nadeem_Walayat
4.Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - Nadeem_Walayat
5.Extreme Gold/Silver Shorting - Zeal_LLC
6.European Empire Strikes Back Against Greek Debt Fantasy, Counting Down to GREXIT - Nadeem_Walayat
7.Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise - Michael_Noonan
8.Gold and Silver Price Headed for Breakdown - Jordan_Roy_Byrne
9.Greece Crisis OXI - Raul_I_Meijer
10.Flatline Investing and Dead End Debt Schemes - Doug_Wakefield
Last 5 days
The U.S. Dollar's 2014-2015 Rally: Wave 3 in Action - 3rd July 15
Stock Market Where are we? And where are we Going? - 3rd July 15
Xi’s Anti-Corruption Campaign Is Key to China’s Prospects - 3rd July 15
How the New Iranian Nuclear Deal Will Impact Crude Oil - 3rd July 15
China's Stock Market Rollercoaster Ride Continues - 3rd July 15
Gold Stocks Cheap to Buy but Not for Long - 3rd July 15
Capital Controls and a Bank Holiday in Greece… Here’s How You Can Profit - 3rd July 15
Greece's Varoufakis: I will Resign if there's a 'Yes' Vote - 2nd July 15
The Student Loan Bubble: Gambling with America’s Future - 2nd July 15
Inflation Is Lurking, but This Asset Can Protect You - 2nd July 15
Three Total Wealth Stock Investor Tactics You’ll Need Because Greece Isn’t Over - 2nd July 15
Why This $5.6 Trillion Investor Profit Boom Is Set To Take Off - 2nd July 15
Greek Debt Crisis: "Too late to prepare now" - Video - 2nd July 15
Guaranteed US Dollar Death Dynamics - 2nd July 15
The Greek Stress Test & The Reality Of Incremental Changes - 2nd July 15
Forget Drachmas Greece Syriza Government Could Instruct Central Bank to Print Euros! - 2nd July 15
Greece Debt Crisis Trigger for Stock Market Crash or Bull Rally? Video - 1st July 15
Gold Stocks Break Below 2008 Low - 1st July 15
SPX Stock Market Retracement May be Over - 1st July 15
Silver Tunnel Vision 'Experts' - 1st July 15
Gold And Silver - Monthly, Quarterly Ending Analysis - 1st July 15
Europe’s Controlled Demolition - 1st July 15
The End of Dow 18,000; Bailouts No Longer Extended  - 1st July 15
Athens Mayor: Greek Government Should Resign - 1st July 15
China Stocks - This Is What a Bubble Looks Like - 30th June 15
Stocks Plunge on Greece Euro-Zone Financial Armageddon Blackmail - 30th June 15
Greece Crisis Shows Importance of Gold as Europeans Buy Coins and Bars - 30th June 15
Stock Investors Express Route to Profits in the Healthcare Sector - 30th June 15
Beyond the Greek Impasse - 30th June 15
Gold GDXJ : Impulse Move Pending - 30th June 15
Fed Interest Rate Increase Could Be Best Thing to Happen to Gold - 30th June 15
Marc Faber - Greece is Basically Bankrupt - 30th June 15
Greece - Shoot the Dog and Sell the Farm - 29th June 15
Grexit?, BIS Warning, Chinese Market Crash & Systemic Risk Shake the Global Economy - 29th June 15
The New "Sharing Economy" May Not Be the Profit Bonanza Everyone's Expecting - 29th June 15
Gold and Silver Greece and Short Positions - 29th June 15
Volatility and Sleep-Walking Markets - 29th June 15
Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - 29th June 15
Stock Market More Decline Ahead? - 29th June 15
China Stock Market Crackup - The Final Trap Looms... - 29th June 15
Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit - 28th June 15
Investor Stock Play for Two Growing Missile Threats - 28th June 15
Stock Market Uptrend/downtrend Inflection Point - 27th June 15
Greece Crisis OXI - 27th June 15
Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise - 27th June 15
It’s Time to Change the Way You Look at Disney Forever - 27th June 15
Flatline Investing and Dead End Debt Schemes - 27th June 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

China Stocks - Where are they going?

Stock Market Crash What is Going On?

Stock-Markets / Financial Crash May 08, 2010 - 05:51 AM GMT

By: Robert_McHugh_PhD

Stock-Markets

Best Financial Markets Analysis ArticleWhere do I even begin. Thursday, May 6th, saw the single largest daily decline in the history of the U.S. Stock Market. But, even more amazing is that most of it occurred in a matter of 10 minutes, between 2:40 and 2:50 pm EST. During that ten minute period, the Industrials fell approximately 600 points. It was a scary drop, an all-out panic attack, a stock market crash free-fall where bids were absent, and selling pressure was powerful. At the bottom, the Industrials had fallen 1,010 points Thursday. Then deep pockets intervention appeared and bought markets hard, stopping the dive, and driving prices higher.


The previous greatest single day decline was 780.87 points on October 15th, 2008, inside a multi-week stock market crash. Even though there was a 600 point bounce into the close Thursday, the Industrials and stock market still ended the day down substantially. The Industrials closed the day down 347.80 points, or 3.2 percent, the largest closing drop since February 2009, over a year ago. The selling continued Friday, the Industrials falling another 140 points after being down over 200 intraday. The Industrials, S&P 500, and NDX are now all down for the year 2010. If you missed the rally from February, you didn't miss anything.

There was a lot of chatter from the cheerleaders in the mainstream financial media suggesting that the decline was a computer glitch of some sort, a mistake by a large seller, a fat finger, or a bunch of other nonsense reasons. The truth is, Thursday saw all out selling panic, the fourth 90 percent down day in two weeks, a situation we also saw before the stock market crash of September 2008 through November 2008. We mentioned this warning in Tuesday's newsletter to subscribers, before Thursday's debacle. Thursday's drop was predicted by the stock patterns, and came a day after our DP/SP indicator generated a sell signal, and occurred with our key trend-finder indicator on a sell signal. No surprise, the technical analysis we have been showing in these pages warned of a coming sharp decline. Further, the stock market had strong downside momentum before the 10 minute collapse late Thursday. The Industrials were already down over 300 points before the 2:40 to 2:50 pm EST collapse. Panic selling was already starting before any so-called computer selling technology issues kicked in.

Both the NYSE and NASDAQ reported that there were no technology issues from the exchanges that affected the plunge. That said, both the NYSE and NASDAQ decided to cancel trades that moved 60 percent or more above or below the last printed prices at 2:40 pm EST. There was clearly some serious bizarre trading in many stocks, as sell orders were generated with little or no bids, allowing some stocks with illiquid market-making to fall dramatically. The market became extremely inefficient. This demonstrates the fragility of markets at this time, that something like this could happen, and should have a destructive impact on confidence in markets, especially from retail investors, who are feeling more and more alienated from the volatile nature of markets, and the corruption on Wall Street.

As the week progressed, fears of Europe's economic woes spread like a contagion. Riots continued in the streets of Greece. It is becoming obvious that sovereign insolvency is a growing possibility in many nations, as deficit to Gross Domestic Product ratios, and debt to GDP ratios threaten the foundation of western economies.

The internals of the market worsened this week. New 52 Week Lows rose substantially above the 85 we have been warning about as a barometer for a potential crash. They came in Thursday at 218. We did not get a Hindenburg Omen observation Thursday because the number of New Highs were insufficient. We need both New Highs and New Lows to be more than 2.2 percent of total NYSE issues traded, which is about 70. We came close to getting one Thursday, as New Highs were 52. We will report any news of a Hindenburg Omen to subscribers in our Daily Market reports at www.technicalindicatorindex.com

Thursday's decline didn't even put a dent in the overbought level of the weekly Full Stochastics, although they are now solidly on a sell signal. This suggests we are going lower over coming weeks.

The Wilshire 5000 Index, which is really about 6,000 stocks, is essentially the entire U.S. listed stock market. This index tells us the U.S. stock market has lost $1.0 trillion of value over the past two weeks. All the gains over the past 5 months have been wiped out in the past two weeks. It took just two weeks to destroy months of gains. The big picture patterns have been warning in spades that something is very wrong with all major stock markets and economies globally. We are now starting to see the details and news unfurl which technical analysis showed the markets knew was coming. And it is not over. More danger lies ahead. That does not mean a bounce cannot occur from time to time, but patterns are warning that there are serious risks to economies and global stock markets, dangers that could wipe out 80 percent of more of the value of stocks over the next several years.

Which brings us to Gold. Gold is inches away from setting an all-time new high. We have a substantial position in Gold in our conservative portfolio. What we are now seeing, which is fascinating, is Gold is beginning to replace fiat currencies around the globe as the world's reserve currency. Euros are being sold by the busload in exchange for Gold. We have been tracking patterns in Gold for several years which suggested something like this was going to happen. We also have a concentration of U.S. Treasuries in our conservative portfolio. Well, Treasuries are doing very well as this crisis continues to unfold. U.S. Bonds rose 3 points Thursday. The yield curve is flattening again, which is often a sign of a coming economic slowdown. European countries are going to have to raise taxes and cut spending, a plan of austerity which will reduce aggregate demand globally, and exacerbate a worldwide economic slowdown.

It is highly likely that Catastrophic Supercycle degree wave (C ) down has started.

How are our indicators doing? Well, since the PPI generated a sell signal on April 16th, the Industrials fell 1,149 points, or 10.4 percent. Sell signals in the 14 Day and 30 Day Stochastics have been followed by declines of 9.7 and 10.2 percent. The very next day after our Demand Power and Supply Pressure Indicator triggered an Enter Short signal, we saw Thursday's intraday stock market crash. Recent sell signals in our NDX key trend-finder indicators have been followed by 12 percent declines in the NDX. The recent sell in the RUT's PPI on April 30th has seen a subsequent 11 percent decline.

Check out our New May Specials, good through Sunday, May 9th, 2010, including a fabulous 13 month offering, only $259, a little over $21 a month, or 2 years for only $459 at www.technicalindicatorindex.com. We also offer a FREE 30 Day Trial Subscription, by clicking on the FREE Trial Button at the upper right of our home page at www.technicalindicatorindex.com

“Jesus said to them, “I am the bread of life; he who comes to Me
  shall not hunger, and he who believes in Me shall never thirst.
For I have come down from heaven,
     For this is the will of My Father, that everyone who beholds
  the Son and believes in Him, may have eternal life;
  and I Myself will raise him up on the last day.”
                                
John 6: 35, 38, 40

by Robert McHugh, Ph.D.  
technicalindicatorindex.com

Robert McHugh Ph.D. is President and CEO of Main Line Investors, Inc., a registered investment advisor in the Commonwealth of Pennsylvania, and can be reached at www.technicalindicatorindex.com.

The statements, opinions, buy and sell signals, and analyses presented in this newsletter are provided as a general information and education service only. Opinions, estimates, buy and sell signals, and probabilities expressed herein constitute the judgment of the author as of the date indicated and are subject to change without notice. Nothing contained in this newsletter is intended to be, nor shall it be construed as, investment advice, nor is it to be relied upon in making any investment or other decision. Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment. Neither Main Line Investors, Inc. nor Robert D. McHugh, Jr., Ph.D. Editor shall be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided. Copyright 2008, Main Line Investors, Inc. All Rights Reserved.

Robert McHugh, Ph.D Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History