This is what was feared would happen. If the DOW managed to stay above 8000, we might be in for a recovery. If it drops below 8000 again, all bets are off. Today, following Geithner’s speech, which provided little new information on the stimulus implementation, markets started dropping like it was another Lehman Brothers bankruptcy.
Overall, the DOW dropped 382 points today, bringing it back to the November low again.
That’s pretty serious. What we should focus on now is how much lower it goes. Some have speculated 6000.
Do you have some cash ready to take advantage of these new lower prices? I’d start doing your research again. Who knows what will happen tomorrow as a result of this. I guess it’s a self-fulfilling prophecy: as Geithner said, things are going to get worse before they get better.
I’m not trying to fan the flames of panic here. But I know that some readers don’t pay attention to certain daily market movements the way I do – I’m just giving a heads up. I just want to say: hey, something important happened today in the markets. It’s a significant technical event for those who do technical readings of charts. But it’s also a significant event in terms of fundamentals, because it’s going to change the way more companies are valued.
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I actually added to my ETF positions yesterday, so I was sort of glad that the large sell-off allowed me to get in a few percentage points cheaper.
I’m not too worried about the possibility of a further sell-off; if we were to fall into the 6000 range, I’d just work even harder to scrape up the money and really get in at dirt-cheap levels.