NationStates Jolt Archive

Taking the economic rollercoaster to new heights, the Dow closed at a gain of 936 points: Link-O-Matic (http://apnews.myway.com//article/20081013/D93PRUAG0.html)

NEW YORK (AP) - Wall Street stormed back after its worst week ever and staged the biggest single-day stock rally since the Great Depression on Monday, catapulting the Dow Jones industrials to a 936-point gain and finally offering relief from eight consecutive days of stock market carnage.

While no one was saying the worst was over for the staggering financial system or troubled economy, buyers returned to the stock market with gusto, with some saying stocks had been driven down to fire-sale prices.

The surge came as executives from leading banks were summoned by the Bush administration to Washington to work out a plan to get loans, the lifeblood of the economy, moving again. And it followed signals that European governments would put nearly $2 trillion on the line to protect their own banks.

The Dow gained more than 11 percent, its biggest one-day rally since 1933, and by points it shattered the previous record for a one-day gain of 499, during during the waning days of the technology boom in 2000.

So, to the average economic layman like myself, this looks good. Is there any way to tell whether this is a good first step to recovery, or is it a fluke?

yep its all over. we can move on with something else now that correct government intervention has prevailed :)

Stocks go up, stocks go down, it really doesn't say much to me about the overall economy. GDP isn't changed. Employment isn't much changed.

Stocks go up, stocks go down, it really doesn't say much to me about the overall economy. GDP isn't changed. Employment isn't much changed.
Produce and Employment don't mean shit when money is based on the sort of magic pixie dust that turns mortgages that will never get paid back into reputable investment packages.

It's people with money picking off all of the pieces as the stocks went low. You have to remember, last weeks drop was preceded by a stock market of this sort, and just as the market had a record week, it just picked up another tenth of it in a record day.

I would be more apt to believe that the market is recovering if it stayed particularly steady. But there's no reason for me to believe it will be any time soon, nor should I believe that there is a concrete plan for governments to guarantee inter-bank loans or support failing financial institution. Until so, I see it fit for the market to show much more of this activity.

Produce and Employment don't mean shit when money is based on the sort of magic pixie dust that turns mortgages that will never get paid back into reputable investment packages.

Considering that the majority of mortgages are actually current (the default rate is around 6% to 7% at present), even the weakest mortgage pools still produce positive cash flows. However, there isn't much of a market for them at the moment. That doesn't mean there won't be a market in the future once the defaults can brought under control and the housing market stabilizes.

I was thinking on the weekend, alongside many others, that Friday might have been the bottom. After a day like that many people on margin loans will have been kicked out, hedge funds needed to dump shares so they had cash for redemptions. Now that they're done with this, and we're actually getting good news from the political front, it was time to go bargain hunting.

Anyways, time now to watch interbank lending rates. With so many government guarantees, surely there's enough reason now for them to go down to more reasonable levels. Until that happens, anything going on with equities is irrelevant.

I was thinking on the weekend, alongside many others, that Friday might have been the bottom. After a day like that many people on margin loans will have been kicked out, hedge funds needed to dump shares so they had cash for redemptions. Now that they're done with this, and we're actually getting good news from the political front, it was time to go bargain hunting.

Anyways, time now to watch interbank lending rates. With so many government guarantees, surely there's enough reason now for them to go down to more reasonable levels. Until that happens, anything going on with equities is irrelevant.

A lot of "experts" seem to think that the worst of the panic selling is over and that things should be less volatile now. That's not to say the markets will be over 15,000 or anything soon. I still think we face a recession (we were headed for one before the credit crunch anyway) but hopefully we've averted some of the nastier possible outcomes.

It was the best day for the dow. But I wouldn't spike the ball just yet. Long way to go but the recovery has to start somewhere. It will fall again and come back again. Many experts say to hold your stocks and wait it out. More and more that sounds like the best strategy for investors.

Yah, friday was a shoppers paradise. Disorderly liquidation, once in a decade type thing, 85 billion sigma &c.

So if you didn't pull a few long terms there, well, so sad to bad. There were some prices you won't probably see in a decade. (Providing the bank thing works).

On the other hand, if you think that was 'the' bottom, you are insane. Indexes are clogged with zombie companies. Though that won't probably come out until next year.

Tomorrow, the Dow will move sideways.
The next day, the Dow will move backwards in time.

Tomorrow, the Dow will move sideways.
The next day, the Dow will move backwards in time.
By Friday, the Dow shall overleap time, space, and dimensions, and without bodily motion peer to the bottom of creation.

So, to the average economic layman like myself, this looks good. Is there any way to tell whether this is a good first step to recovery, or is it a fluke?

as a non-economic person... I'd say watch and wait for a week or so.

There is a good chance that many investors will sell after such a large rise in preparation for another fall. Meaning prices could suddenly drop drastically at any time. In fact... prices rise and fall for no particular reason.

FYI, market volatility as measured by the VIX was at its highest level ever. That being said, it has only been around since the late 1980's, but to be that high and so far above the levels set during previous periods of market turmoil is highly intriguing.

I think we had capitulation on Friday, so this may mark the start of a recovery in the market. However, it'll probably take at least a couple of months to really see if there is a true uptrend so I'd advise not getting in to the markets just yet.

FYI, market volatility as measured by the VIX was at its highest level ever. That being said, it has only been around since the late 1980's, but to be that high and so far above the levels set during previous periods of market turmoil is highly intriguing.

I think we had capitulation on Friday, so this may mark the start of a recovery in the market. However, it'll probably take at least a couple of months to really see if there is a true uptrend so I'd advise not getting in to the markets just yet.

1990. And the vix changed a few years ago, so you can't really look at one against the other. But in either case this was the worst ever.

So, yah, capitulation. But the bottom. Only know that if the 20 wk/ 50wk crosses. By which time it is too late to capture sharp moves.

Stay nimble. Meep-Meep.

In Oz there are some indications things are calming down. Not that they really were that bad to start with, but it's still nice to see: http://www.businessspectator.com.au/bs.nsf/Article/Credit-where-credit-is-due-KDTPB?OpenDocument&src=sph

And the government is going to spend some of the surplus money from the past few years on a fiscal stimulus. Ahh, the luxury of wallowing in cash...
http://www.businessspectator.com.au/bs.nsf/Article/Rudd-Swan-to-make-announcements-within-hours-KDTN2?OpenDocument

It's all about confidence. It's a shell game, and people don't want to play unless they think the people running the shells are good at what they do.

It's telling that they went when the G-7 made the move, and not when Paulson and the US moved. Odd how the G-7 decided to back credit during a credit crunch, while Treasury is talking about nationalizing banks. Gollee Gee, which one gives capitalists more confidence?

It's telling that they went when the G-7 made the move, and not when Paulson and the US moved. Odd how the G-7 decided to back credit during a credit crunch, while Treasury is talking about nationalizing banks. Gollee Gee, which one gives capitalists more confidence?
I'd say that it was the decision by the Europeans to go with the British model (and Paulson's decision to do the same) had more to do than the vagaries the G-7 guys came up with.

It's telling that they went when the G-7 made the move, and not when Paulson and the US moved. Odd how the G-7 decided to back credit during a credit crunch, while Treasury is talking about nationalizing banks. Gollee Gee, which one gives capitalists more confidence?

Tells me you don't know what's happening.

NL beat me to it.

But I think, still screwed.

Not enough people hung out to dry. And that's what we really want to see. Any collapse of bank lending is in expectation of that.

And looking down the road, all this mess still has to be paid for. I said Dow 9500 before the end of this year, (target met and exceeded), and I will say dow 5000 before the end of next.

7500 close on the week is a definite.