Stocks plummet, Dow down 733

Testing the 8451 Dow low may be very coming soon. Dow dropped 733 to 8577 with very heavy selling going into the close, decliners over advancers 8-1 & NAZ was down another 150 (seems like triple digit losses are becoming common at the NAZ). S&P 500 FINANCIALS INDEX had another bad day in all this mess & uncertainty:

Value 210.23

Change -21.10

% Change -9.1%

The Alerian MLP index dropped 12 to 194 taking it well below the psychologically important 200 level. The Dow Jones REITs were punished severely, dropping an amazing 25 to 167.

In all this confusion gold was up 8 but oil pulled back below the important 75 level. Exxon Mobil, largest oil company, a Dow stock & recently joined the S&P 500 Dividend Aristocrat list, dropped 10 (yes, I said TEN) to 62. Earlier this year it traded at 95. Fears of a deep & long recession on running high!

CLX08.NYM

..Crude Oil Nov 08

....74.48

... 4.15 ..(5.3%)

Federal Reserve Chairman Bernanke, gave a speech at lunch time trying to soothe nerves. It didn't work as Dow sold off another 100+ during the speech, taking it to "down 500." Below is a quick but key paragraph from his comments plus 4 links to get an idea of what markets digested today.

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The U.S. faces ``a very serious too-big-to-fail problem,'' in which the insolvency of a large financial company could threaten a market collapse, Bernanke said in reply to an audience question. ``There are too many firms that are in some sense systemically critical.''

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•Bernanke Urges Limits for Asset Bubbles, Bank Power to Promote Stability
•JPMorgan's Dimon Expects More Loan Losses as Economy to Get `a Lot Worse'
•SEC Clears U.S. Banks to Postpone Writedowns on Value of Some Securities
•Bush Says U.S. Taxpayers Will Get Back `Most' of Money Under Bank Rescue


NASDAQ -- 10 years




This is a chart for the tech heavy NASDAQ which has suffered badly just in the last year, falling close to 50% (similar to Asian stocks which make & sell to these companies). Last night while Asian markets traded, the term "risk averse" was used frequently. As investors sell Asian suppliers or US tech stocks, much of that money is going into risk averse securities. For example, the 90 day US T-bill has a discounted interest rate of 14 basis points (that's the annualized rate)! That means to get $100 from the Treasury in 3 months, an investor will buy it for 3¢ less $100 today, that's risk averse!

I have a friend who has been day trading part time for a decade (including the ugly period at the start) & has done well over the entire period. He said watch for hedge fund selling in the last hour. I think we saw that today! Already the Mon rally seems like ancient history. Markets are catching on even that even with recent patches from central banks, there are no quick fixes. We may just have to endure a rough recession.