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Ear to the Ground

What Goes Down ... Dow Up 10 Percent

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Posted on Oct 28, 2008
tickertapedigest.com

The Dow shot up 889.35 points on Tuesday, a welcome respite from Wall Street’s month of plunges. Things could still get a lot worse: While some buyers snapped up what looked like bargain stocks, others said they expected a major drop before things get better.


Wall Street Journal:

Heading into the end of October, the Dow has plunged 17%, on track to register as the worst month in its history. But that plunge has whetted bargain hunters’ appetites and forced some money managers whose funds are required to hold a certain percentage of money in stocks to come back into the market as the time approaches to mail month-end statements.

Despite Tuesday’s gains, some participants remain concerned that trading volume has been light, making it difficult to gauge investors’ level of conviction that the gains can continue. Exchange-only volume at the New York Stock Exchange on Tuesday struggled to reach the month-to-date average of 1.7 billion shares.

Although it didn’t happen Tuesday, the stock market lately has often been plagued by forced selling among hedge-funds and other deep-pocket players, who have to raise cash to cover margin calls as the market goes down. While such activity has often produced avalanches of selling lately, some veteran investors are still looking for a one-time market plunge, accompanied by big volume, to confirm that the forced selling has truly run its course, paving the way for a more sustained rally.

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By Fahrenheit 451, October 29, 2008 at 3:57 am Link to this comment

The stock market no longer reflects the true economic condition of this country and hasn’t for a long time.  But I think Nuriel Roubini is correct; we haven’t hit bottom by at least 20%.  This 11% rise is a false indicator.

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By libertarian, October 29, 2008 at 3:19 am Link to this comment
(Unregistered commenter)

Look at job loss and shopping trends. If you buy stocks long now, you are inviting disaster. Check out inverse shares and gold, all etf’s. Don’t be fooled by the CNBC promotion of stocks. Add some inverse-etf’s. I’ve stayed 40% above the S&P;with this.

Just as examples, if you buy GLD, short a third of it with DZZ. If you buy MDY, a nice long-term gainer (till now ), protect yourself with something like pssdx. Dont take my word for it, check the charts. Brokers will not help you with downside protection.

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By troublesum, October 28, 2008 at 6:15 pm Link to this comment

Is this Obama’s idea of shared sacrifice: wall street firms like Goldman Sachs and Merrill Lynch are laying out $13 billion in end of year bonuses for their ceo’s and other executives.  And some of these firms are raking in billions from the taxpayer bailout plan.  Obama is keeping his mouth shut.  Sacrifice is for little people.  Source: democracynow.org

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