Another down day for the Dow
October 10th, 2008 by Antony Ganzitti
Closing Data
| current | change | % | |
|---|---|---|---|
| Dow Jones | 8579.19 | -678.91 | -7.3% |
| NASDAQ | 1645.12 | -95.21 | -5.5% |
| S P 500 | 909.92 | -75.02 | -7.6% |
| FTSE 100 | 4313.8 | -52.9 | -1.2% |
| Nikkei 225 | 9157.49 | -45.83 | -0.5% |
| SPI Futures | 4120 | -180 | -4.2% |
| All Ords | 4,291.30 | -78.5 | -1.8% |
| Oil | 88.94 | -1.24 | -1.4% |
| Gold | 886.5 | -20 | -2.2% |
| Silver | 11.875 | 0.103 | 0.9% |
| Copper | 240.6 | 5.1 | 2.2% |
| Aluminum | 2253.5 | 48.75 | 2.2% |
| Lead | 1656.5 | 97 | 6.2% |
| Nickel | 13200 | 215 | 1.7% |
| Tin | 14760 | -145 | -1.0% |
| Zinc | 1470.35 | 66.35 | 4.7% |
US stocks plunged dramatically in the final hour of trade after Standard and Poor's (S&P) credit rating agency puts General Motors on review for the possibility of a ratings cut. S&P also put the Ford Motor Company on credit watch negative.
In a recent issue of Market Fox we discussed the three major ratings agency, and began to question their transparency as they continually maintained a AAA rating for the US Government, something hard to believe. The Dow Jones fell 678 points or more than 7% to its lowest level of 5 years. The Uncle Sam hedge fund may yet have another investment in its portfolio of battered stocks. Watch this space as both GM and Ford have been under financial and economic strain for quite some time.
General Motors shares fell as much as 21% and hit levels which they have not seen since 1950, absolutely astonishing! The ban on short-selling of financial securities was also lifted last night and as usual opinion is divided amongst analysts whether this has exacerbated the problem or whether it is bringing the market back into equilibrium in order for it to find 'true value'.
We touched on the issue of capitulation in a couple of the recent issues of Market Fox and it is a theory which we all need to be aware of and understand. The US market is seriously capitulating, and it is like a snowball effect as prices continually drop. Fundamentalists continually question where value is in the market, and most have been long and wrong for a while now. This is why charting is important even for the most avid fundamentalists around, as technical analysis is the study of price action which in turn is a direct proponent of human behavior and psychology. We'll touch on more charts in Monday's Market Fox report.
Thought of the day...
"Irrational exuberance", a phrase used by former Federal Reserve Board Chairman Alan Greenspan in a speech given at the American Enterprise Institute during the stock market boom of the 1990s.
...exuberance works both in bull and bear markets.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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