Thursday, October 9, 2008

Stocks in freefall; Dow below 9000

In the face of a torrent a bad economic news including global bank nationalizations, investors lost hope late this afternoon as markets sold off over 7% in New York. The Dow closed below 9000 for the first time since 2003 and finished the day at a bracing 8579 while the S&P ended trading at 909.

While not quite 'crashworthy', this was more or less in keeping with my standing prediction for a large percentage decline (5-10%) for today, October 9th.

I believe there is more downside tomorrow, although my sense is much of the negative planetary energy has already been expressed. It's possible we will see a further decline to the much-talked about support level of 7500-8000, but I think there will be a lot of buyers at 8000 so we should expect a lot of intraday volatility. Of course, it's conceivable that the Dow goes below these levels, but it's not probable and even if they do, they won't stay there very long.

I think Friday will be the much-sought after capitulation and near term bottom after which we will rise into next week. We are now facing a two month bottoming process where there will be some retesting of the lows we likely make tomorrow. Early November is the first probable retest, and then again in the first two weeks of December.