Stocks in New York succumbed once again to the growing realization there will be no quick fix to this economic downturn on the release of some very bad retail numbers. The Dow plunged 733 points and ended at 8577 while the S&P lost 9% and ended the day at 907. Indian stocks also lost ground earlier in the day as the Nifty was down 6% closing at at 3338 while the Sensex finished at 10,809.
The volatility this week has been incredible and has made mincemeat out of my daily predictions. Nonetheless, our overall bearish stance has been borne out by the failure of Monday's rally to gain a foothold. Yesterday I wondered if Thursday would be the best day for a rally. I think this is all the more likely now in light of today's drop and the better than expected Ebay earnings posted after the bell. I would not rule out 9000 tomorrow on the Dow. Friday in the US looks less favourable and Monday looks even worse. It is possible we will be retesting the Oct 10 intraday lows sooner than I thought, although next week looks like there may be a two or three day rally off the Monday lows so that might keep us in the 8500-9000 range. As always, I will refine my forecast as time goes on. But overall, I think we're still on track for a low in the first week of November, possibly between 7500-8000 on the Dow, and perhaps below 3000 on the Nifty, and maybe 9000 on the Sensex.
