Markets in New York fell off a cliff today after the House of Representatives unexpectedly rejected the emergency financial bailout bill. The Dow lost a record 777 points or 7% and closed near its worst levels of the day at 10,365. The S&P lost 9% or 106 points and closed at 1107. This decline confirms my prediction from two weeks ago that the 29th would be very negative, although I had thought the drop might be more like 5%. Over the weekend, when it seemed that the bill would pass, I wondered if my original prediction had been mistaken, as I wrote in my weekly forecast. As it turned out, it underestimated the losses. Not surprisingly, oil fell $11 to $95 as investors worry of a global economic slowdown and gold rose over $22 and closed at $910. Today's New Moon in Virgo that featured a beleaguered Mercury may be seen as one important indicator for the decline in stocks.
I think tomorrow's trading will likely be negative but I don't foresee any huge drop like today's. In fact, there may be a stabilizing in the afternoon. I still expect some kind of rally perhaps on Wednesday and Thursday. As in my weekly forecast, Friday is looking quite iffy, perhaps due to some bad economic news in the jobs report.
Next week looks even worse, so we may be preparing for a 1000 point drop in the Dow. Even with a rally later this week that might get the market back to 11,000, I think we'll be under 10,000 with next week's collapse. 9000 is a worse case scenario by October 10th, although that is a very speculative target.