Wednesday, October 22, 2008

US stocks plunge 6% on corporate earnings outlook

The full-fledged gloom returned to Wall St today as stocks sold off sharply on an increasingly bleak profitability outlook. The Dow closed at 8519 and the S&P ended the session down 6% at 896. The mood in Asia was also negative as the Nifty closed down 5% to 3065 and the Sensex at 10,169.

It seems the market is accelerating its pace for a retest of the Oct 10 lows and will in fact get there by Monday Oct 27. While I had thought we would see more upside this week, the overall trend is more or less in keeping with our expectations. I'm even less certain about tomorrow's session than I was about today's (which was incorrect) as there are some divergent indicators both ways. With the Moon moving into aspect with the Sun and Pluto near midday, one might be tempted to say that the morning might be higher, with more selling in the afternoon. But even with the possibility of gains, this is no time to be long. By contrast, Friday and next Monday look more clearly bearish.