Dow Jones becomes a bear market

BBC ^ | 07/02/08

[TigerLikesRooster]

Dow Jones becomes a bear market

A bear market is commonly defined as one that is 20% below its peak

The Dow Jones Industrial Average closed more than 20% below its October 2007 peak on Wednesday, meaning it is officially a bear market.

The blue-chip index fell 166.8 points or 1.46% to 11,215.5, which is 21.0% below its 14,198.1 close on 11 October.

The biggest drag on the index was General Motors, which fell below $10 a share for the first time since September 1954.

The S&P 500 index closed just shy of 20% below its peak levels.

[Vince Ferrer]

Well, maybe. GM is about to release the Cheverolet Volt in 2010. I have a feeling sales for this vehicle are going to be off the charts

Do they have until 2010 though? GM is a 50% stakeholder of the 8th largest pile of unsellable subprime mortgages, which is sucking up all of their cash, and it will only get worse. I'm not sure they can sell enough cars to pay for their mortgages.

[Pelham]

Well, you must be an Obama supporter, because I’ve heard that all this Gloom & Doom talk is a plot by the main stream media to destroy all that is good about America.

There is no housing bubble. There is no bear market. You can simply choose not to participate in any so-called recession. Did I leave anything out?

[Pelham]

Be sure you only charge up at night.

[TigerLikesRooster]

We have once-in-a-life-time buying opportunity.

Saudi and China will bail us out.

......

[thefactor]

i heard that a bear market occurred if the market fell 20% within a three month period. a much different definition than this article.

[Freedom_Is_Not_Free]

Yup! That’s what NASDAQ buyers said in early 2001. And mid 2001. And late 2001. And again in early 2002. Still said it in mid 2002. All the way to the bottom.

I know people who have not invested in equities since they lost their life savings in the NASDAQ. Most of those people were around 30 years old at the time and life savings were only $20,000 to $60,000. But they never got back into equities. They just don’t trust them.

Then again, what have they lost? How many stocks are above their 2000 levels? Not a hell of a lot.

[Freedom_Is_Not_Free]

Yup! That’s what NASDAQ buyers said in early 2001. And mid 2001. And late 2001. And again in early 2002. Still said it in mid 2002. All the way to the bottom.

I know people who have not invested in equities since they lost their life savings in the NASDAQ. Most of those people were around 30 years old at the time and life savings were only $20,000 to $60,000. But they never got back into equities. They just don’t trust them.

Then again, what have they lost? How many stocks are above their 2000 levels? Not a hell of a lot.

[rbmillerjr]

“Fibonacci support at 11,500 has failed. The next retracement will take the Dow down to about 10,000. If that holds, buy. Otherwise, if that fails, the next retracement level will be 7500.”

I was thinking 11,200 would be a good place to buy in say about 15-25% (I’ve been in cash since 14,000).

But now that we are here, I don’t really like what I see. I think we need a cleansing capitulation of 800-1000 pts. But who knows with this market.

[Freedom_Is_Not_Free]

You summed it up perfectly. Women and children hit hardest...

[EVO X]

This goes to show that the frantic denials by selected FReepers will not keep the market from dropping.

At some point people are going to get tired of selling financial stocks. XLF is down ~45%.

[FlyVet]

At some point people are going to get tired of selling financial stocks.

True. I have a few shares of ETrade at 4. They are now dirt cheap at 3.23. A great buy IF and I mean IF they survive.

[EVO X]

They are now dirt cheap at 3.23.

Good luck on your your roll of the dice..

[Proud_USA_Republican]

I actually covered some very profitable shorts today in the last hour of trading because I smell another bull trap rally starting soon. For a few of these stocks, I’ve been seeing more churn than down the past week. I expect financials to be part of this fake rally front and center since they have been beaten like a redheaded stepchild for months now.
Look at the XLF. Brutal, but primed for a little pop.
I felt that oil was going to peak during the 4th of July weekend, and begin to head back down.
But one big one out this week is what the EU fed plans to do tomorrow. If they raise rates and use language that they will continue on that path, the dollar will be massacred and look out below.

[Proud_USA_Republican]

I bought some wamu at $5 this past week. It is a dice roll, but I believe they will survive.

[steve86]

But one big one out this week is what the EU fed plans to do tomorrow.

I plan to check in during the night and see what transpired.

[FreedomPoster]

>>Plus, the US power grid will melt down (literally) as a result of electric car owners plugging in every night, unless the infrastructure is upgraded to some multiple of its current capacity.

I'm guessing neither of you knows what a typical daily electrical demand curve looks like, at least in the Sunbelt. Here's a typical curve I found with an image search. Ignore the "battery charge percent", which has to do with the technical paper I got this chart from, on the subject of using electric vehicles to supply power to the grid during peak periods.

The effect of charging overnight would be to flatten the load curve, with little peak increase, which means that the utilities would get more use out of their installed capital equipment. This would tend to reduce cost/kWh over the long haul.

The one thing that might be needed, would be a time delay on recharging until after, say, about 7PM, to make sure that enough office and air conditioning loads have dropped off the grid, so that a new peak in that approximate time frame doesn't get created.

[ChicagahAl]

Excellent chart. I appreciate the post.

One thing that is missing is the anticipated demand that would be drawn by possibly millions of electric vehicles. These vehicles would not all be little Smart Cars. Think about all the UPS/FedEx/etc delivery vehicles, ambulances, utility vehicles, etc. In other words, the vehicles that use the most fuel and probably pollute the most. But even just the personal transportation autos; how much juice will they use? Plus the “recharge at work” period is during a high-demand part of the curve.

I think you are making the assumption that they will draw less than the peak of commercial and residential. But will that be true? Plus, while you mention a potential requirement to wait until 7pm, a look at the chart tells me that the requirement might have to be after 9pm, or even later. Will that be enough time to charge the batteries prior to 6am the next morning?

I understand that this is still on the drawing board. And I further think that electric cars are a great idea. I just don't think that we are as ready for them (nor the electric cars ready for us) as the left would like everyone to believe. Manufacturers could produce millions of them in a few short years if they knew that people would buy them. But, can people afford to buy and maintain them? Will they be safe? Will the power grid support it?

Your chart is the best I've seen, and I think we need as much info as we can get.

Thanks.

[FreedomPoster]

There’s no doubt that charging later in the day, say noon-7PM, might affect the demand peak. The question is, How necessary is that? Will people be able to work with night time recharging only?

We just don’t know yet.

A key point to all of this, is that it won’t happen overnight, so utilities will have some opportunity to see this coming. I’d be surprised if EPRI and the utilities don’t already have some pretty sophisticated studies and planning. I just did a search at EPRI Research on electric vehicle and got over over 1600 hits, so I’m sure there is some material on this subject there.

In general, I expect the electric utilities can’t wait to get more of this load (and revenue) on their systems. The biggest problem we have is the Greens and NIMBYs stopping new plant construction. In Georgia, we just had a state superior court judge rescind a construction permit issued in 2007 for a new coal plant because CO2 emissions weren’t considered in the permitting process. Global warming nonsense is starting to have real effects, and they aren’t good ones.

[EVO X]

I bought some wamu at $5 this past week. It is a dice roll, but I believe they will survive.

That is one ugly chart...

[EVO X]

But they never got back into equities. They just don’t trust them.

For somebody in their 30's this is nothing but noise. This is a great time to get started making contributions to 401Ks and IRA's. People drive off the lot in $40K car and don't even blink an eye at the immediate 20% decline in value. If they lose 20% of a $40K portfolio, the world is coming to an end...