CHESSNOID

After the US 2nd stock market drop of over 700 points in the DOW and 7-9% drop in the other indexes, the world stock markets are reacting accordingly.  We rallied and then they rallied.  By the way, that was a classic bear market sucker’s rally.  Now that we fall, they fall too.

NEW YORK (CNNMoney.com)

Stock markets in Asia and the Pacific fell sharply on Thursday, a day after U.S. markets were pummeled by growing fears of a worldwide recession.

Japan’s Nikkei index fell nearly 10%. Australia’s market was down nearly 6%. Hong Kong’s Hang Seng and South Korea’s KOSPI index slumped 7%.

Wall Street was hit hard on Wednesday as recession fears mounted. The Dow Jones industrial average plummeted nearly 8%, or 733 points, marking its second biggest one-day point loss ever.

Normally, a bounce can be expected in these situations.  My guess is it won’t be there.  The closing numbers for 10.15.2008 are:

I watched the debates and neither candidate actually instills any confidence in fixing the economy.  All I heard them both say is more taxes and more spending.  Remember, they both voted for the FRAUD BAILOUT bill passed a week ago of about $850 BILLION tax payer money.  Right now we have record deficits.  How are either of them going to balance the budget if they both want to spend more?  That can only be achieved by cutting spending or raising taxes.  Neither really want to cut spending, so looks like taxes are going up for sure.

What makes the bounce difficult to achieve after this massive drop is the closeness of the previous record drop of 778 points from last Friday.  Options expiration is this Friday.  With more companies coming out forecasting lower profits and bigger losses, the chances increase that there will be more sellers than buyers in the coming days.  Rightfully so, since many investors have just been burnt badly in the last 2 weeks.  It is actually difficult to achieve 10% a year on your investments in a normal economy.  The market has fallen about 40% since it reached its high a year ago.  Watching 20% shaved off in the last 10 days only accentuates the risk involved of losing.  When you lose that much money in that short period of time, it starts to feel more like gambling than investing.  When the pot is your life savings, you walk away from the tables.

The stock futures right now look like this:

	Dow	-64.00	-0.75%	8,440.00
	NASDAQ	-4.50	-0.37%	1,224.50
	S&P	-6.10	-0.68%	897.20

We could rally from this if we got positive news or if the bargain hunters come out in force. I get the feeling more of them will sit this out. All rallies will be met with sellers who didn’t get out from the record bounce on Monday’s 11% one day returns. My guess is a down day tomorrow and a repeat of today’s massive sell off in the last hour. Remember, both the technicals and fundamentals are all pointing South.