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Stock Market Panic Special

News_Letter / Financial Markets Jan 23, 2008 - 02:29 AM GMT

By: Nadeem_Walayat

News_Letter

The US Fed's Emergency interest rate cut of 0.75% to 3.50% to prevent the panic selling of the European and Asian stock markets from spreading to the US markets succeeded in preventing a crash, with the Dow Jones closing just 128 points lower after an opening drop of 450 points.

The current wave of selling was sparked following last weeks results and doubling of losses by Merrill lynch and Citicorp


The Market Oracle Newsletter

Stock Market Panic Special
January 23rd , 2008            Issue #4 Vol. 2


Dear Registered Member,

The US Fed's Emergency interest rate cut of 0.75% to 3.50% to prevent the panic selling of the European and Asian stock markets from spreading to the US markets succeeded in preventing a crash, with the Dow Jones closing just 128 points lower after an opening drop of 450 points.

The current wave of selling was sparked following last weeks results and doubling of losses by Merrill lynch and Citicorp

The final nail in the coffin was the clear sign of the sub prime bad debts contagion spreading into the bond insurers, and other debt issuers as the ratings agencies started to cut the credit worthiness of the insurers such as Ambac Financial Group Inc, which increased the probability significantly of a US recession during 2009 as a consequence of corporate failures, hence the Feds emergency rate cut. Expect the US Fed to keep cutting interest rates in the coming months towards a target of 2%, as the Fed fights to fend off a recession during an election year.

What next for stock markets ?

Many indices have triggered technical bear markets i.e. when an index falls by more than 20% from its high, therefore the stock markets look very bearish during the first half of 2008. The most probable scenario for the stock markets is for a rally over the next few weeks and then a re-test of the current lows. The outcome of that retest would set the scene for the next major market move.

The sell off in some of our favorite sectors such as India, Russia and Metals and Mining definitely give opportunities to accumulate for the long-run, i.e. over a 5 year timespan.

One of the few analysts to catch the stock market panic was Robert Prechter's Elliott Wave Internationals, who for over a year have been calling the shots primarily through the application of Elliott Wave Theory and Socio Economics to time the major trends in housing, economics , currencies, commodities and the stock market sectors

As a very special treat and exclusive to the Market Oracle, we have managed to gain access for all market oracle visitors to Elliott wave internationals premium content worth $80 as of today for 1 week !

Free Access includes:

The Short Term Update (Published Mon., Wed., Fri.)
Forecasts of the market's trends & turns each Monday, Wednesday and Friday after the close. Elliott wave charts and commentary for stocks, bonds, metals and the U.S. dollar. Also includes occasional special opportunities for stocks that look poised for major moves. All free during FreeAccess. $40/month value

The Elliott Wave Financial Forecast (Published Monthly)
You'll see intermediate-term price patterns, and read forecasts of how those patterns will unfold. You get monthly wave analysis of stocks, bonds, metals, the U.S. dollar and economic and social trends. Get the January issue free during FreeAccess. $20/month value

The Elliott Wave Theorist (Published Monthly)
Bob Prechter's insights may cover everything from the reversal of a 14-month trend, to an Elliott wave perspective on physics. Regardless of his topic, Bob stands you on the cutting edge of Elliott and the markets themselves. The latest issue will be delivered to you, free. $20/month value

Get Your FreeAccess Now !

 

Nadeem Walayat,
Editor of The Market Oracle

In This Issue
  1. Expert Views on the Stock Market Credit Crisis and Global Economy
  2. Use Short Bear Funds to Hedge Crashing Stock Markets
  3. Will a Plunging Stock Market Send the Economy Into Recession?
  4. Stocks Bull Market Ahead: Indicators Read Warp Speed Eight
  5. US Stock Markets Crash and Burn Whilst The Fed Fiddles
  6. Bullish for Stock Markets When Economy Hits Bottom
  7. Financial Sector Crash Continues with Gigantic Bad Debt Write-downs
  8. Credit Default Swaps: The Continuing Crisis and Big Story for 2008
  9. Bush's Election Year Tax Cut Gimmick as Wall Street Tumble Continues
  10. Northern Rock Bank Bust and the UK Mortgage Banking Sector Crash
1. Expert Views on the Stock Market Credit Crisis and Global Economy

By: John_Mauldin

This week we do something a little different in our Outside the Box. Every weekend I get a very information-filled blog called Investment Postcards from Cape Town by Dr. Prieur du Plessis. In it he highlights what he thinks is the most important portion of the writings of 10 to 15 analysts from around the world on the state of the economy and investing, and summarizes the news and data. I find it very useful, as Prieur generally finds a lot of interesting pieces that I miss and go on to read in my effort to stay on top of the markets. You can subscribe on your own if you like by activating the subscription option on the blog.

Read Article

2. Use Short Bear Funds to Hedge Crashing Stock Markets

By: Donald_W_Dony

With the introduction of the bear fund, analysts and investors have another very valuable tool to review the markets that was not available before. The use of fundamental analysis can provide investors with an inside look at the financial health of a company, its management skills and spot potential difficulties for the organization in the near future. Technical analysis allows the investor to review large numbers of securities, in different time frames, for profit opportunities, but normally only from one perspective; the buy side. The bear fund offers that mirrored image of a security that when used properly, can greatly expands the investors vantage point and provide valuable data that is not available through simple fundamental reviews or only buy-side technical analysis.

Read Article

3. Will a Plunging Stock Market Send the Economy Into Recession?

By: Gerard_Jackson

So far this month the Australian share market has dropped by 10 per cent, sending some people into a panic and raising the spectre of recession. Let us begin by putting this in historical perspective. In October 1987 the Australian share market plunged by 50 per cent. This drove the economic commentariat to wail that the economy was heading into a deep recession.

Read Article

4. Stocks Bull Market Ahead: Indicators Read Warp Speed Eight

By: Joseph_Dancy

With talk of a serious U.S. economic recession now being commonly heard on every corner, and with the massive write-offs now being taken in the financial sector soon to be followed by massive layoffs, it is a difficult time to be invested in the market. Volatility has been extreme, and we expect that will remain so for the first quarter of 2008. But our indicators point to the fact that later in the year we could see some very positive trends for investors.

Read Article

5. US Stock Markets Crash and Burn Whilst The Fed Fiddles

By: Robert_McHugh_PhD

I hate to bash Fed Chairman Ben Bernanke, but I'm going to for a few pages. Here's the deal. The current economic threat is screaming for an aggressive inflation solution. Inflation comes from the Fed. Forget about the inflation the Fed has caused over the past 90 years, and the doubling of the money supply to goose markets for the past eight. A lot of that was dead wrong, a theft of our children's future, coming at an unnecessary time.

Read Article

6. Bullish for Stock Markets When Economy Hits Bottom

Roger_Conrad

Sixteen years ago, I was fortunate to work on what I still consider to be one of the best guides to understanding the stock market for US investors: “Market Timing for the Nineties” by Stephen Leeb.

At first glance, this book is dated automatically by its title. Its basic premise, however, applies to any decade. In fact, it's more relevant than ever here in 2008, where recession worries have taken over the market mood.

Read Article

7. Financial Sector Crash Continues with Gigantic Bad Debt Write-downs

By: Money_and_Markets

Mike Larson writes: The stock market is in a state of near-panic. The Dow tanked another 307 points yesterday, continuing a string of triple-digit declines that have marred the new year. The latest action is proof positive that the credit problems that began in the housing and home mortgage market are spreading out in concentric circles.

They're forcing builders to cut back furiously on home construction. They're causing companies to slash jobs. They're weakening the broader economy, helping drive losses on credit cards, auto loans, and other products higher.

Read Article

8. Credit Default Swaps: The Continuing Crisis and Big Story for 2008

By: John_Mauldin

  • Democrats Ready to Politicize the Fed
  • More BLS BS
  • Credit Default Swaps: The Continuing Crisis
  • A Stimulating Political Package
  • The Economy Continues to Weaken
  • Europe, Phoenix, and My New Chair

Read Article

9. Bush's Election Year Tax Cut Gimmick as Wall Street Tumble Continues

By: Anthony_Cherniawski

The looming economic recession is getting “deer-in-the-headlights” recognition by the politicians in Washington . The unfortunate response is to offer “sound byte” solutions rather than real economic stimulus. The Bush administration and the presidential candidates are all vying for who can offer the most attractive stimulus to voters rather than offer the best solution for a healthy economy. The Wall Street Journal offers some insight into the dilemma that we face.

Read Article

10. Northern Rock Bank Bust and the UK Mortgage Banking Sector Crash

By: Adrian_Ash

"...All investing is risky – all the way down to zero. And if government steps in to bail out a business, it should've gone to the wall in the first place..."

JUST IN CASE YOU'D forgotten – or you've set up a hedge fund in London lately – shareholders come last in line when a listed company goes bust.

Read Article

 

For more indepth analysis on the financial markets make sure to visit the Market Oracle on a regular basis.

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(c) 2005-2008 MarketOracle.co.uk (Market Oracle Ltd) - The Market Oracle asserts copyright on all articles authored by our editorial team. Any and all information provided within this newsletter is for general information purposes only and Market Oracle do not warrant the accuracy, timeliness or suitability of any information provided in this newsletter. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We recommend that independent professional advice is obtained before you make any investment or trading decisions. ( Market Oracle Ltd , Registered in England and Wales, Company no 6387055. Registered office: 226 Darnall Road, Sheffield S9 5AN , UK )

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