KHS,
>>>> could increase in patriotism bolster consumer confidence? Could the horrific disaster boost worldwide internet communications and commerce? These variables could change the fundamental market forces that have been in place!!! <<<<
I don't want to give the impression of being bullish, but I'm right now really not that bearish, and I do think that patriotism may help.
I dont have the exact facts, so feel free to correct me. During the depression, JP MORGAN was able to organize a group where he, at the lead, was buying as the the market was crashing. Not that he was able to create a rally, but what I believe he did was put in a bottom. If it wasn't for his efforts, it is my understanding that it could have been alot worse.
I have heard from the news that the FEDs has been adding to the money supply dramatically.
Frankly, I believe it is mainly up to the big players/mutual funds. If there is not alot of small individual liquidation of mutual funds, the mutual funds may not have to sell that much. Of course, a mutual fund may want to hedge, in light of the current situation, but that can be done without selling stock. Hedging for a mutual fund could take the form of using futures, which should have a less direct effect on the stock market than selling stock out-right. However, if the individual investors, in mass, demand liquidation, then the mutual funds will have no choice.
Please don't get me wrong. Im not saying that there will be a rally, just saying that with patriotism there is fair chance that the extent of the selloff may be limited and that the bottom could be higher than some or many expect.
In terms of real numbers to illustrate. Lets say, hypothetically, that the initial selloff in the NDX bottoms around 1200-1100, without patriotic efforts it may have broken well below 1000. Or if it did break 1000 to around 900, without patriotic efforts it may get to 700. Again, was only using these numbers for the purpose of illustration, and not as a prediction. Another way to say it - wherever the bottom lands, without patriotic forces it could be much worse.
Also, we have to add the overseas efforts to help stabilize the markets. Maybe Im too idealistic now, but Im not that bearish that the markets crashes dramatically(Kahuna/1987 type), although I do suspect a selloff initially.
I would like to also add that the I feel that the DOW is now more susceptiable than the NAZ, in light of the airlines and insurance. Concerning the airlines, its not just the passenger carriers but also the cargo carriers. |
