Today at 1:30 PM I noted to one of my trading partners that the market would end at its lows for the day because the volume on the upticks were extremely weak. My best guess was for the Dow to end somewhere below the 12300 area but to my surprise the mounting present of the bears sold us off an additional 200 points. Chicago futures traders were on a mission to sell everything they had on paper and end the day at the lowest level in 15 months.
I hate to beat the horse again but this is a bear market! We are 2000 points below the highs in the Dow and the broad base Russell 2000 is now 20% below it summer 2007 highs. We are now seeing the spreading of the mortgage and derivative markets spread to areas of the economy that we thought was fool proof from the mortgage dilemma.
I hope I am totally wrong about this but I saw something today that scared me technically. Today I saw the indices drop the most percentage in months without the markets being in panic mode. This is alarming as I have been saying we must have some from of capitulation (panic selling) before we find a bottom. What is panic selling? Capitulation would be a significant sell climax in the markets where there is virtually no buying 'virtual panic selling' everyone wants to cash out.
We are closer and closer to this point in my opinion and although we might not get the 750-1000 points decline I predicted I still think it is very possible. Today I saw the four horsemen of tech get thrown out with everything else, especially the financials.
Financials are tech are key here because they are the leaders in the economy, some might say commodity based companies especially oil service stocks are now proving to be the leaders but I differ.
Technology and Financials are the leaders hands down and I do see alot more downside especially in tech.
As usual the big guys are manipulating the market and saved this drop in the market till after december so they could collect their record bonuses bt the last laugh might be on them if we head towards full recession as no one will be speared.
Tomorrow is the first option expiration for the year and might be the catalyst for one of two things, 1) more selling or 2)stabilization of some of the selling. M best guess is that next week we might sell hard, with tuesday and wednesday the days to watch for a flush out which should be buyable for a bounce.
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