Daily Investment Interpretations

October 16, 2008

2008-10-16 (5:00 a. m. CDT): Stock futures are pointing higher before the opening this morning. S&P futures are 6.6 points; the Nasdaq is up 7 points; and the Dow rose 38 points before the opening bell this morning. Peter Brimelow: Wipeout Wednesday

2008-10-16 (6:00 p. m. CDT): These are fateful, historic days. The stock market crumpled again today, with the Dow falling 733 points in its second largest point drop in history. What's so significant about this pullback is that the world's governments have just pledged trillions of dollars and historically unparalleled measures to combat the credit crisis. Further, this would appear to be Wall Street's response to Fed Chairman Ben Bernanke's luncheon speech (as described below) before the Economics Club of New York: Bernanke sees long slowdown, but still confident: More difficulties lie ahead but we'll get though them, he tells Wall Street.
      The Nasdaq Composite closed below last Friday's close, but the Dow and the S&P 500 remained a few points above their Friday close. If, tomorrow, the indices successfully retest their Friday lows and turn up, then we may be able to expect a rally lasting through the end of the year. But if they don't, then look out below! Once again, it's "falling-knife" time... time to sit tight and see where this market goes.
    Today was filled with dour news about a shrinking economic outlook and ever-more layoffs. 
    The Nasdaq parted with 150.68 points (8.47%) closing at 1,628.33. The Dow offered up 733.08 points (7.87%) to hit 8,577.91. The S&P 500 proffered 90.17 (9.03%) to end the day with 907.84. The VIX leaped 14.12 points to end at 69.25. Oil hit a new low at $73.52, and gold remained essentially unchanged at $839.00.
    The Proshares Ultra Emerging Markets Fund fell to a new low of $7.93 tonight. When the time is right, that should be a great buy but not yet--not until we see what this market will do next.
    Several bear-market strategists such as Bill Gross of PIMCO, PIMCO's Bill Gross on Where We Go from Here, the managers at Longleaf Partners, Longleaf Leaders See Sunny Days after the Storm, and market forecaster Jeremy Grantham, Grantham- Stocks Haven't Been This Cheap since 1987, who predicted the current crisis when everyone else was oblivious are now saying that we're near a bottom. 
    I'd be delighted to pick up a few thousand shares of UUPIX at $4 a share. 
    There will be numerous earnings reports tomorrow