Global economic crisis

[vbhoutex]

the question I have is will we see an eventual full crash of the market where we lose ~20% in a single day?

Very doubtful according to everything I hear/read.

that may not be good as a full crash would likely set us up at least for a solid bear market rally. If things continue the way they are, we may need to fall to about 6,000 before seeing a short rally, before falling once again. This is eerily similar to the DOW fall during the run toward depression and the NASDAQ fall at the start of the decade

I hear you!! The people I talk to have heard similar from me. I am hoping that they are correct and that we are near the bottom and then the "real" rebound starts within the next year or so.

[Derek Ortt]

I dont think we are at the bottom

We do not have the fear in the market that usually signifies a bottom, or even a bear market rally. before the November bear market rally, there was healthy fear in the market. Now, everyone is calling for a rally. Too much optimism, which is why I think we are going to fall. This morning's rally for no reason also is not helping anything.

I see a short term bottom near 6,000, then a rally to about 7,000, then a fall down to about 4500. Cycle may repeat based upon some of the things I have heard from the analysts (don't really want to get into them as that may be considered political)

[Dionne]

the question I have is will we see an eventual full crash of the market where we lose ~20% in a single day?

Aren't limitations available to suspend trading to prevent large drops in certain time frames?

[RL3AO]

the question I have is will we see an eventual full crash of the market where we lose ~20% in a single day?

Aren't limitations available to suspend trading to prevent large drops in certain time frames?

Nothing major happens until 20%

[Nimbus]

As long as the short sellers can make a profit ratcheting the market down day trading they will.
It would take a huge influx of money to get a productive rally going. The recent rally attempts have not been strong enough that the bears needed to start covering their shorts by buying stocks. Up until a few weeks ago we had seen traders alternating between long and short positions oscillating between a ceiling and floor.

[Derek Ortt]

another day and another new low for the dow

[Dionne]

another day and another new low for the dow

Wow!! What a surprise. Nice steady decline.

[george_r_1961]

And the fall continues. How much worse can it get?

[Squarethecircle]

And the fall continues. How much worse can it get?

I think that's a question I'd rather not have answered.

[gtalum]

Before the collapse started last September, many economists were rpredicting the high 5000's. Doesn't seem to unrealistic now. AT this point I'll be happy if we find a bottom there.

[Squarethecircle]

It is 11:30 AM and I am pleased to report that the DOW is up 4.2 percent, S&P up 4.7 percent, and the NASDAQ up 5 percent.

[cycloneye]

The bulls are running wild today.The question is if its only a one day rally.

[Brent]

DOW
6877.91
330.86
+5.05%
NASDAQ
1347.27
78.63
+6.2%
S&P 500
714.71
38.18
+5.64%

[cycloneye]

This rally has to be sustained for a few days to then we can say for sure,the dow reached the bottom.

Final closing numbers:

DOW=6926.49.379.44 +5.8%
NASDAQ=1358.2889.64 +7.07%
S&P 500=719.643.07 +6.37%

Dow Jumps 5.8% in Bank-Fueled Rally
10 Mar 2009 | 04:13 PM ET Text Size Stocks took off like a rocket Tuesday, led by banks, after a combination of encouraging news from the sector.

The Dow Jones Industrial Average gaining a whopping 5.8 percent, and the S&P 500 rose 6.3 percent. The Nasdaq jumped 7.1 percent.

The rally was sparked by Citigroup [C 1.45 0.40 (+38.1%) ] CEO Vikram Pandit, who said that the bank was profitable in the first two months of the year. He also said he is confident about its capital strength.

The banking sector also got a boost from news that the uptick rule on shorting stocks — which requires that the last trade on a stock must be positive before a trader sells short, or bets against the stock — may soon be restored. Bank stocks have been among those most battered by short sellers as the credit crisis rattled confidence in banks.

Bank of America [BAC 4.79 1.04 (+27.73%) ] also benefitted from a report a day earlier that the company would emerge successfully from the credit crisis.

As traders basked in the glow of today's rally, the question became: Is the banking sector — or the market itself — turning the corner?

"I think this is more than a relief rally based on the news that's triggering it," said Nadav Baum, managing director of investments at BPU Investment Management, citing Citi's comments that it's off to a good start this year and comments recently from Bank of America CEO Ken Lewis that Countrywide and Merrill are doing very well.

Still, he says, we'll have to wait a couple days and see what happens.

HSBC [HBC 27.03 2.77 (+11.42%) ] enjoyed a bounce after hitting its lowest level since 1995 on Monday. More volatility was expected as investors position themselves ahead of the bank's $17.7 billion rights issue.

Shares of Capital One [COF 10.05 1.32 (+15.12%) ] continued their rise, a day after the credit card company announced it was cutting its dividend 87 percent.

Shares also rose for CNBC.com-parent General Electric [GE 8.87 1.46 (+19.7%) ] after the conglomerate said it was selling $8 billion in debt.

Federal Reserve Chairman Ben Bernanke offered some encouraging words to the market.

The Fed chairman said the U.S. and other financial regulators must impose strict rules to help detect and prevent another financial crisis like this one.

"We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components,'' he said in remarks prepared for delivery to the Council on Foreign Relations.

He also laid out some key elements of such an overhaul, including legislation from Congress to spell out how to handle the failure of a large financial institution in an orderly way.

Meanwhile, the SEC has no plans to suspend mark-to-market accounting rules, Reuters reported.

Mark-to-market accounting rules have forced banks to make huge write-downs to assets and there had been some buzz in the market that if the rules were suspended, stocks could explode because it would take a lot of pressure off of banks. A House hearing on the matter is scheduled for Thursday.

“This is nothing new from the rhetoric that we had from Fed Governor Lockhart when he said specifically they’re not going to suspend mark to market," Lutz said. Today’s news "does carry some weight obviously. It’s all headline risk out there now because everyone is so underweight and short this sector.”

http://www.cnbc.com/id/29619580

[fwbbreeze]

Being in the financial services industry todays strong showing by Citi, GE, and BOA was a beacon of hope amongst a sea of woe. We got a long way to go in the financial sector before the road to recovery is well underway but I do believe some confidence is about to come back to the equities market.

[x-y-no]

Being in the financial services industry todays strong showing by Citi, GE, and BOA was a beacon of hope amongst a sea of woe. We got a long way to go in the financial sector before the road to recovery is well underway but I do believe some confidence is about to come back to the equities market.

I sure hope so. I confess this is a field I really, really don't understand. But I have to believe we can pull through this mess and emerge strong on the other side.

[Derek Ortt]

This rally has to be sustained for a few days to then we can say for sure,the dow reached the bottom.

Luis, don;t take offense at this, but I;m glad you're not my financial planner.

We had a couple week long rally in November that resulted in the DOW gaining 20%. That is a classic bear market rally.

During the early 1930's, the DOW often gained 30-50% in its bear market rallies... while sliding to its 89% loss. We may see another 10% gain out of this rally, before the bears come back in even greater force

[lurkey]

Apple and Google to replace GM and Citigroup on Dow Jones?

There is talk around the ol’ internet watercooler that General Motors and Citigroup are about to be kicked off the Dow Jones Industrial Average due to their lackluster performance and long term outlook. Both of the companies stocks are trading around a $1 with Citigroup taking the title of the first stock to be traded on the index as a penny stock. Since the Dow follows 30 of the largest and most widely held public companies in the United States, would Apple (AAPL) and Google (GOOG) take GM and Citigroup’s place if they are removed?

General Motors is the longest continuous fund on the Dow Jones with a 1925 induction date, but the stock has never traded this low related to the overall market; even after the Dow Jones saw mini-crash in 1988. Citigroup was added in 1997 under the name Travelers Group but more recently been part of the US meltdown. While both companies probably represent Americans’ financial outlook accurately, the two companies simply do not meet the basic guidelines for a Dow Jones stock.

The Dow Jones Industrial Average generally is comprised of 30 of the most influential companies which properly provide a cross section of America’s industries. The Dow’s traditional requirements of size and volume doesn’t fair well for both GM and Citigroup in their current state. Both of the companies have lost incredible volume as their collective industries have collapsed, where companies such as Apple and Google have maintained reasonable growth and valuation.

Obviously nothing has been confirmed Dow Jones yet and Apple / Google are not the only possible companies that might replace whoever gets removed from the index. There are numerous other counter-cyclical companies that are surviving and growing in this rescission but Apple and Google are two of the favorites swirling around today. Nevermind the fact that neither company fits the traditional Dow Jones Industrial profile.

Some might say that the Dow Jones, with the limited amount of funds to track, is inaccurate and insignificant compared to the reach of the S&P 500. But still, it is the Dow that most Americans know and follow. Plus, there is a certain amount of prestige having a stock listed on the 2nd oldest index, but both GM and Citigroup have more pressing issues than their Dow Jones status.

From the comment section:

One thing that may make this unrealistic is that Intel, Microsoft, HP and IBM are all part of the DOW. Adding Apple and Google would make it pretty tech/computer heavy. No other industry is currently represented like that in the DOW.

One more question - why wouldn’t Honda/Toyota replace GM?

I find it interesting that you chose to mention Apple but not Cisco as a possible replacement. Since no others were mentioned, MSN Money is also saying Visa, US Steel and Goldman Sachs are also possible.

[Derek Ortt]

adding Google and Apple would be good as it would give the NASDAQ market further representation on the DOW. The DOW is too heavily weighted toward the NYSE

However, if there is a crash, the DOW would keep falling even if the NYSE is halted since the NASDAQ does NOT halt trading due to a drop

[Stephanie]

While any good news is welcome, I suspect it will be a long time before we see a sustained rally. We're going to need to see a downturn in reported unemployment starts, more news about increased spending by the consumers, banks lending money, etc. When we start seeing the freefall slow in the reported numbers for consecutive months, that's when I think people will feel like we've finally bottomed out.

I want to say that perhaps whatever Citigroup has done to plug the leak may be a sign that there will be no more layoffs there (or whatever) for the time being.

I'll bet that we will be seeing a sell off tomorrow by those that are looking to cash in for a quick profit. Hopefully the sell off tomorrow won't swing us back down 300 pts.