Full Version: Huge selloff today in the rest of the world
Be aware of the huge selloff globally today, and you might want to watch the American stock exchanges tomorrow. There might be a drastic drop tomorrow.
future down 500 already
http://www.bloomberg.com/markets/stocks/futures.html
http://www.bloomberg.com/markets/stocks/futures.html
QUOTE (kolaman @ 1-21-08, 1:41pm) 
future down 500 already
http://www.bloomberg.com/markets/stocks/futures.html
http://www.bloomberg.com/markets/stocks/futures.html
What are futures?
short definition of future: a contract where the seller agrees to sell and the buyer agrees to buy something at a future date, like a particular stock or exchange traded fund (which is like a mutual fund but traded on an exchange). Aside from timing differences and dividends, the future behaves a lot like the underlying stock or fund. On a day like today when the stock market is closed but the future is being traded, the future gives you an idea on where the market is headed tomorrow. As far as the stock market goes, tomorrow is going to be a very bad day, as the futures for the S&P 500 are down about 4.5%.
Hmmm this sucks. I bought my mutual funds right when the stock market started to drop. I want my money back!!!! hehe, ohh well, kiss another thousand dollars goodbye.
Looks like a wild ride tomorrow! Might be a good time to buy some things I have been putting off.
Hmmm, I should probably log into my Roth IRA now, to look at the number before it is becomes $5k lower. 
ShangHai Stock market plummeted 8% today. So is the Japanese market...Is it all started?
Good article from SA, quoting the WSJ: Link
QUOTE
Recession Could Be Boon for Stocks - WSJ
posted on: January 21, 2008 | about stocks: DIA / IEF / QQQQ / SPY
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While a U.S. economic recession isn't yet official, many pundits say it's either imminent, or that it is already here. On Sunday, the Wall Street Journal's Greg Ip posted an informative Q&A, entitled, "What a Recession Could Mean to You." Salient excerpts follow:
What is a recession?
The generally accepted arbiter of when U.S. recessions begin and end is the "business cycle dating committee" of the 87-year old National Bureau of Economic Research, a non-profit group based in Cambridge, Mass., that is made up of 600 academic economists. The NBER defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months"... A popular rule of thumb says a recession is two consecutive quarters of shrinking GDP.
Are we in a recession?
We won't know for sure unless the NBER announces it... But there are some indicators that are not flashing recession. Employers have not trimmed employee work weeks... Initial claims for unemployment insurance have actually dropped so far in January. Perhaps most important, inventories are not unusually high, which makes it less urgent for manufacturers to scale back production.
How long could a recession last?
Recessions have gotten shorter and less frequent since 1945, averaging just 10 months. And the two last recessions were among the shortest and mildest on record; both the 1990-1991 downturn and the 2001 recession lasted just eight months.
How will the stock markets do?
In all but one of the past 11 rate-cutting cycles (including several when a recession didn't materialize), the Standard & Poor's 500-stock index has risen -- advancing an average 17% in the 12 months after the Fed starts to cut rates... If pre-2001 patterns hold, that suggests the next eight months could end up being good for stocks.
posted on: January 21, 2008 | about stocks: DIA / IEF / QQQQ / SPY
Print Email
While a U.S. economic recession isn't yet official, many pundits say it's either imminent, or that it is already here. On Sunday, the Wall Street Journal's Greg Ip posted an informative Q&A, entitled, "What a Recession Could Mean to You." Salient excerpts follow:
What is a recession?
The generally accepted arbiter of when U.S. recessions begin and end is the "business cycle dating committee" of the 87-year old National Bureau of Economic Research, a non-profit group based in Cambridge, Mass., that is made up of 600 academic economists. The NBER defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months"... A popular rule of thumb says a recession is two consecutive quarters of shrinking GDP.
Are we in a recession?
We won't know for sure unless the NBER announces it... But there are some indicators that are not flashing recession. Employers have not trimmed employee work weeks... Initial claims for unemployment insurance have actually dropped so far in January. Perhaps most important, inventories are not unusually high, which makes it less urgent for manufacturers to scale back production.
How long could a recession last?
Recessions have gotten shorter and less frequent since 1945, averaging just 10 months. And the two last recessions were among the shortest and mildest on record; both the 1990-1991 downturn and the 2001 recession lasted just eight months.
How will the stock markets do?
In all but one of the past 11 rate-cutting cycles (including several when a recession didn't materialize), the Standard & Poor's 500-stock index has risen -- advancing an average 17% in the 12 months after the Fed starts to cut rates... If pre-2001 patterns hold, that suggests the next eight months could end up being good for stocks.
The Fed took some action:
Link
Link
QUOTE
Fed Cuts Interest Rate 3/4 of a Point
Tuesday January 22, 8:37 am ET
By Martin Crutsinger, AP Economics Writer
Federal Reserve Cuts Interest Rate Three-Quarters of a Point to Try to Head Off Recession
WASHINGTON (AP) -- The Federal Reserve, confronted with a global stock sell-off fanned by increased fears of a recession, cut a key interest rate by three-quarters of a percentage point on Tuesday, the biggest one-day move by the central bank in recent memory.
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The Fed said it was cutting the federal funds rate, the interest that banks charge each other on overnight loans, to 3.5 percent, down by three-fourths of a percentage point from 4.25 percent.
The Fed action was the most dramatic signal it can send that it is concerned about a potential recession in the United States. It marked the biggest one-day move by the central bank in recent memory.
The Fed decision was taken during an emergency telephone conference with Fed officials on Monday night. Those discussions occurred after global financial markets had plunged Monday as investors grew more concerned about the possibility that the United States, the world's largest economy, could be headed into a recession.
In a brief statement, the Fed said it had decided to cut the federal funds rate "in view of a weakening of the economic outlook and increasing downside risks to growth."
Tuesday January 22, 8:37 am ET
By Martin Crutsinger, AP Economics Writer
Federal Reserve Cuts Interest Rate Three-Quarters of a Point to Try to Head Off Recession
WASHINGTON (AP) -- The Federal Reserve, confronted with a global stock sell-off fanned by increased fears of a recession, cut a key interest rate by three-quarters of a percentage point on Tuesday, the biggest one-day move by the central bank in recent memory.
ADVERTISEMENT
The Fed said it was cutting the federal funds rate, the interest that banks charge each other on overnight loans, to 3.5 percent, down by three-fourths of a percentage point from 4.25 percent.
The Fed action was the most dramatic signal it can send that it is concerned about a potential recession in the United States. It marked the biggest one-day move by the central bank in recent memory.
The Fed decision was taken during an emergency telephone conference with Fed officials on Monday night. Those discussions occurred after global financial markets had plunged Monday as investors grew more concerned about the possibility that the United States, the world's largest economy, could be headed into a recession.
In a brief statement, the Fed said it had decided to cut the federal funds rate "in view of a weakening of the economic outlook and increasing downside risks to growth."
That should be interesting today. A fed rate cut should make the market happy....and even Goos doesn't recall anything like this without a meeting ever before.
QUOTE (AMS @ 1-22-08, 9:45am)
...and even Goos doesn't recall anything like this without a meeting ever before.
I don't either, but I don't have the experience goos does... I'm thinking that this might stave off the expected sell off.
And that's too bad, I was hoping to get in on some bargains today. But instead, I'll wait for this to trickle down to the mortgage market and refi into a 15 year that's under 5%.
Exactly, one way or the other if you are positioned correctly you can take advantage of these things.
The feds had some desperate moves today. But the market still goes down more than 400 points in 2 minutes. Is it a time to BUY?
QUOTE (NARC @ 1-22-08, 9:39am)
But instead, I'll wait for this to trickle down to the mortgage market and refi into a 15 year that's under 5%.
With the spreads it may not work out as expected on the mortgage rates. Only time will tell.
QUOTE (carloscai @ 1-22-08, 9:46am)
The feds had some desperate moves today. But the market still goes down more than 400 points in 2 minutes. Is it a time to BUY?
Crazy, down 400 recovers a bit, down again....
QUOTE (AMS @ 1-22-08, 10:52am)
With the spreads it may not work out as expected on the mortgage rates. Only time will tell.
Definitely true - this is not the same market that it was a couple years ago with fed funds under 2%. But I am figuring that most players would love to make a conforming Prime-A loan these days, and might offer a break on rates to do it. Especially on a 40% LTV loan. We'll see - it will take a week or so to know. Some banks are already lowering their prime rates.
Not a bad comeback.
10:50 AM
DJIA
11,917.30
-182.00
NASDAQ
2,284.50
-55.52
S&P 500
1,302.52
-22.67
10:50 AM
DJIA
11,917.30
-182.00
NASDAQ
2,284.50
-55.52
S&P 500
1,302.52
-22.67
Dow is 40 down now. Not too bad. The fed came to the rescue.
We will see how the foreign markets react tomorrow - that will be important.
I hope I get my tax refund back in time to take advantage of the decline in the market. For long-term investors, this is a great buying opportunity. As someone (I think) said, if you have a 401(k) where you can easily rebalance without tax consequences, today might be a good time to do so and take advantage of dollar-cost averaging.
Freakin' amazing. My trading account started down close to $2,000 this morning, but ended up $1,244. 
I'm not complaining mind you. I'll take a $1,200 gain every day of the week. It's the volatility that amazed me today.
I'm not complaining mind you. I'll take a $1,200 gain every day of the week. It's the volatility that amazed me today.
Oh man, take a look at AAPL after hours. Currently down $17+ (over 11%) on disappointing outlook.
QUOTE (Alan @ 1-22-08, 3:59pm)
Freakin' amazing. My trading account started down close to $2,000 this morning, but ended up $1,244.
I'm not complaining mind you. I'll take a $1,200 gain every day of the week. It's the volatility that amazed me today.
I'm not complaining mind you. I'll take a $1,200 gain every day of the week. It's the volatility that amazed me today.
Any gain today is good! I was not so lucky.
QUOTE (Alan @ 1-22-08, 8:00pm)
Oh man, take a look at AAPL after hours. Currently down $17+ (over 11%) on disappointing outlook.
Great time to buy.
Me? I'm still pissed that I let my sister talk me out of buying AAPL at $11.
I'm woefully ignorant about single stock trading, but I was thinking of opening a brokerage account and buying a few stocks for a buy-and-hold strategy long term. How does after-hours trading work? Say I had the account open, and bought AAPL last night? Do I get the "after-hours trading" current price? I presume you can buy right away at that price, and not wait for the market to open, right?
QUOTE (dewolfxy @ 1-23-08, 8:28am)
I'm woefully ignorant about single stock trading, but I was thinking of opening a brokerage account and buying a few stocks for a buy-and-hold strategy long term. How does after-hours trading work? Say I had the account open, and bought AAPL last night? Do I get the "after-hours trading" current price? I presume you can buy right away at that price, and not wait for the market to open, right?
Yes. However AH trading is not as liquid as during normal trading hours, you can see more price volility, higher spreads between the bid & ask and I believe you need to specify a price, whether buying or selling. This is called a limit order as opposed to entering a market order where you get the current bid or ask at the time the order is executed. I only use limit orders when buying or selling anyway.
Many time you'll see a stock open higher or lower than it's AH or pre-market trading range. AH or pre-market trading can be very risky.
Thanks for the info. I've read about limit orders. But I thought the trades were pretty instantaneous now, like several seconds? So if you used a market order, once you click to make the trade, how long until you know what price you got? A minute? Less? Basically the concern is if something is very volatile you could get a bad price, right? But assuming you're buying long-term, the relatively small volatility from moment to moment shouldn't really matter, right?
And if you have to specify a price, how do you do that? Say it's trading around $130/share. Do you specify $130/share, and then wait for that request to be filled? Or do you specify slightly lower, assuming that the volatility will make it dip down and catch that price? So if it's $130/share, you put a limit order for $129.50, and then when it dips to that amount the system grabs it for you?
I guess I've always thought of limit orders as a way to avoid risk or buy in when the price is right, not for trading of this kind. When I've thought of them, I imagine having a standing limit order to sell if some stock drops below $100 (to limit your loss), or buy if a stock goes below $50, so you can get in when it's a good deal. You keep those standing orders, and then just wait for what the market does. That's the way I understood it. So how do they work if you are doing AH trading?
And if you have to specify a price, how do you do that? Say it's trading around $130/share. Do you specify $130/share, and then wait for that request to be filled? Or do you specify slightly lower, assuming that the volatility will make it dip down and catch that price? So if it's $130/share, you put a limit order for $129.50, and then when it dips to that amount the system grabs it for you?
I guess I've always thought of limit orders as a way to avoid risk or buy in when the price is right, not for trading of this kind. When I've thought of them, I imagine having a standing limit order to sell if some stock drops below $100 (to limit your loss), or buy if a stock goes below $50, so you can get in when it's a good deal. You keep those standing orders, and then just wait for what the market does. That's the way I understood it. So how do they work if you are doing AH trading?
The rest of the world went up and yet US still down 
Dow down 190
Nasdaq down 65
SP500 down 26
Dow down 190
Nasdaq down 65
SP500 down 26
QUOTE (dewolfxy @ 1-23-08, 9:56am)
And if you have to specify a price, how do you do that? Say it's trading around $130/share. Do you specify slightly lower, assuming that the volatility will make it dip down and catch that price? So if it's $130/share, you put a limit order for $129.50, and then when it dips to that amount the system grabs it for you?
Exactly.
I thought the market was going to be horrible again today.
Can anyone explain this 626 bounce in regards to our so-called 'recession'?
Thanks!
Can anyone explain this 626 bounce in regards to our so-called 'recession'?
Thanks!
QUOTE (NARC @ 1-22-08, 10:39am)
QUOTE (AMS @ 1-22-08, 9:45am)
...and even Goos doesn't recall anything like this without a meeting ever before.
I don't either, but I don't have the experience goos does... I'm thinking that this might stave off the expected sell off.
And that's too bad, I was hoping to get in on some bargains today. But instead, I'll wait for this to trickle down to the mortgage market and refi into a 15 year that's under 5%.
Well, I refi'd into a 5%, 15yr today. I could have gotten lower, but this is for zero cost. I could have gotten 4.75% if I paid points and closing costs, but the amortizations showed that the no-cost 5% was cheaper over 10-15 years.
And the monthly payment only changes by $14 between the 2 rates anyway....
http://www.reuters.com/article/topNews/idUSWAT00874820080123
No recession expected this year: Congressional Budget Office
WASHINGTON (Reuters) - The slowing U.S. economy is unlikely to sink into an election-year recession and an economic rebound could begin as early as next year as housing and financial market turmoil fades, the Congressional Budget Office forecast on Wednesday.
In the meantime, the U.S. budget deficit will grow to $219 billion this year, up from the $163 billion registered last year, according to a CBO report submitted to Congress.
But that forecast by Congress' nonpartisan budget analyst does not include the cost of an economic stimulus measure that is quickly moving through Congress and could cost around $150 billion or more. The deficit projection for fiscal 2008, which ends September 30, also does not include more money Congress is likely to approve this year for the war in Iraq.
While CBO noted an elevated risk of recession, its outlook was weighted more toward the United States working through its current economic problems and escaping a full-blown recession.
"Although recent data suggest that the probability of a recession in 2008 has increased, CBO does not expect the slowdown in economic growth to be large enough to register as a recession," CBO said.
"CBO expects the economy to rebound after 2008, as the negative effects of the turmoil in the housing and financial markets fade," the semi-annual budget and economic report said.
Surveys of U.S. employers, CBO said, so far do not suggest they plan large future reductions in hiring. However, CBO noted that "such labor-market indicators could deteriorate suddenly."
House Budget Committee Chairman John Spratt, a South Carolina Democrat, said the CBO report offered "some sobering news" for the U.S. economy.
No recession expected this year: Congressional Budget Office
WASHINGTON (Reuters) - The slowing U.S. economy is unlikely to sink into an election-year recession and an economic rebound could begin as early as next year as housing and financial market turmoil fades, the Congressional Budget Office forecast on Wednesday.
In the meantime, the U.S. budget deficit will grow to $219 billion this year, up from the $163 billion registered last year, according to a CBO report submitted to Congress.
But that forecast by Congress' nonpartisan budget analyst does not include the cost of an economic stimulus measure that is quickly moving through Congress and could cost around $150 billion or more. The deficit projection for fiscal 2008, which ends September 30, also does not include more money Congress is likely to approve this year for the war in Iraq.
While CBO noted an elevated risk of recession, its outlook was weighted more toward the United States working through its current economic problems and escaping a full-blown recession.
"Although recent data suggest that the probability of a recession in 2008 has increased, CBO does not expect the slowdown in economic growth to be large enough to register as a recession," CBO said.
"CBO expects the economy to rebound after 2008, as the negative effects of the turmoil in the housing and financial markets fade," the semi-annual budget and economic report said.
Surveys of U.S. employers, CBO said, so far do not suggest they plan large future reductions in hiring. However, CBO noted that "such labor-market indicators could deteriorate suddenly."
House Budget Committee Chairman John Spratt, a South Carolina Democrat, said the CBO report offered "some sobering news" for the U.S. economy.
QUOTE (unsmart3d @ 1-23-08, 5:46pm)
I thought the market was going to be horrible again today.
Can anyone explain this 626 bounce in regards to our so-called 'recession'?
Thanks!
Can anyone explain this 626 bounce in regards to our so-called 'recession'?
Thanks!
As far as today's activity all I can say is WOW!
I just got home and saw what happened. Last I heard on the radio the DOW was down 150 points, but up from being down over 200.
Up another grand today & broke even on a couple of stocks I'm holding. Sold most everything a few weeks ago when I didn't like what I saw in the markets, but held some stock I thought would do well. In the short term I was wrong as the market started to decline further, but not wanting to take a small loss I held until it would become a big loss (what else is new).
I just got home and saw what happened. Last I heard on the radio the DOW was down 150 points, but up from being down over 200.
Up another grand today & broke even on a couple of stocks I'm holding. Sold most everything a few weeks ago when I didn't like what I saw in the markets, but held some stock I thought would do well. In the short term I was wrong as the market started to decline further, but not wanting to take a small loss I held until it would become a big loss (what else is new).
Even in the stock market drop of 1987, where the market dropped 20%+ in one day, the overall performance for the year was positive. I'm happy because a REIT fund that I have some money in was up almost 9% yesterday 
QUOTE (BlueTDimly @ 1-24-08, 6:33am)
Even in the stock market drop of 1987, where the market dropped 20%+ in one day, the overall performance for the year was positive. I'm happy because a REIT fund that I have some money in was up almost 9% yesterday
Brave man - I exited my REIT fund early last year when REITS started to drop. I violated my buy and hold principle because the runup in REITs was so high. I expect to get back in as the prices are low enough to do well again.
I bought into this particular REIT fund late last year, so much of the downside was already factored in (I hope!). It's in a retirement account that I won't touch for a long time, so I'm not terribly worried...
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