As you all know, we had a terrible day again with Dow down by 650+ points about 30 minutes before the close and then closed down 514 points. Other market indexes were similarly down. The market was trying to test the lows of 10 10 2008, but, the volume was much lower. And, it was a relief that volume was lower.
But, like all of us, no one knows how long this historically high volatility will last. The volatility measured as VIX by Market Technicians is over 70, higher than the price of oil. And, this a relief that price of oil is coming down, but, implicit in this lowering of price is demand destruction, or significant slow down in economic activity through out the world. I am sure that we are buying smaller cars. China's exports to USA must be down. India's technical manpower needs may be going down and Obama's tax policy would impact, possibly reducing export of jobs from USA.
I hope none of you have exposure to margin and people with margin, mutual funds and hedge funds continue to encounter forced selling due to margin calls.
We will have more selling till the weak hands are forced to sell to stronger market participants. Remember, there is some one buying when some body sells. Today, there were no buyers for the last 200 points and the drop was quite fast.
Stocks like GE, MSFT and others are on sale even though they are AAA rated for credit.
Remember, this is historic time for the market and it can go down further, but not by much. But, it will continue to churn... I wish, it was not, but, market is market, which means that weak hands are trying to survive and strong hands are trying to win over the weaker hands, just like in a poker match.
Just stay cash rich and do not buy any stocks, how so ever cheap they look. Bottom fishing is a loser's game now and it is a losers game most of the time.
Best regards....
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