A Personal Message to Our Clients From Paul Rabbitt, President Rabbitt Analytics, Inc:
The employees and staff of Rabbitt Analytics are stunned and shocked at the terrorist
attacks on our country today. Our immediate concern is for the safety of our friends in the
financial community who work in the World Trade Center and all of downtown. You have
our prayers. Your families have our prayers.
If you are not directly involved in this terrible tragedy but are concerned for our country
and our financial stability, we offer this guess based on our twenty-five years experience:
1. Unless this turns out to be the unlikely act of war from another country, it will have a
minimal impact on our domestic everyday personal safety in the coming months and years.
2. The US economy is diverse and robust in its diversity. This is a non-recurring economic
event. There will some impact due to several days of disrupted markets, cancelled flights,
and delayed travel.
3. Stock markets are likely to open down 7-15 percent. This is confirmed by the limited
trading in stock futures just before the trading was halted. Dow Jones technical support
areas include 9171, 8660, and 8220. S&P500 support areas include 1060, 970, 880.
Support areas for the NASDAQ include 1640, 1420, and 1350.
4. Bear markets often reverse after climactic events. This qualifies as a climactic event.
Our experience suggests placing sell orders with your brokers will result in poor
executions and a high probability of "selling at the lows". Selling during unstable times is
never a good idea. The markets will possibly be disorderly and inefficient executions may
cost you unnecessarily large losses.
5. Do not buy until the markets settle down.
6. During catastrophic events, it is typical that natural resources (gold and oil) prices will
surge higher. This is not a lasting effect. Volatility will be high for a few months now. It is
also natural that the US Dollar will fall sharply.
7. The Federal Reserve is open and operating normally.
8. The NYSE and all stock trading exchanges have suspended activity. Several European
exchanges have also closed. We agree with SEC chairman Harvey Pitt, who said
disruption of normal trading patterns is a temporary phenomenon. It is also unlikely the US
stock market will open until Monday. The major problem is that 30% of the US clearing
operations were in the World Trade Center. Several world markets announced they
would open tomorrow.
9. Bull markets start when the news can't get any worse. We reaffirm our belief that bull
markets are "birthed" from catastrophic events such as this.
10. After the Kennedy assassination, the DJII fell 3%, the recovered.
11. After the previous bombing of the World Trade Center, the DJII fell a mere .5%, then
rallied
12. After the invasion of Kuwait, consumer confidence fell, the market declined, then upon
our invasion of Kuwait, a bull market began.
For now, we recommend you maintain a "cool-head". This is not something you or any
professional could have anticipated. You cannot avoid the impending volatility. Do not
trade when markets are in disarray. There is no rational reason for investors to sell-off
corporate America based on a non-economic event such as a terrorist bombing. we have
included yesterday's market opinion below:
Paul Rabbitt, CEO
Rabbitt Analytics, Inc. |
