DOW finishes below 8,000, NASDAQ loses 6.5% as stocks crumble in final half hour.

MarketWatch ^ | 11/19/08 | MarketWatch

[Freedom_Is_Not_Free]

Ping to my post #100. Am I off base here? I think it is painfully obvious with anyone who can read a chart.

[rabscuttle385]

The shadow government began pumping the markets hard on the 27th, one week before the election, right through election day, and pulled the rug out the next day letting the natural collapse continue. This is as clear as day.

Interesting...but does the same trend show up in other indices (e.g., the S&P 500)?

[Freedom_Is_Not_Free]

Absolutely. Intentional ramp job to promote investor confidence and save incumbents jobs. They may be dunces, but they aren't stupid. This is typical of the games Washington plays and they play the Sheeple like a fine Stradivarius. They have this manipulation down to an art.

S&P 500 Index. Ramp job starts on 10/27/08, ends on election day.

Same for the NASDAQ. Same ramp job. Same timeframe. Clockwork. Like magic. The week of the election, the Sheeple are given hope and a reason to love their crooked incumbents. All is well. Go back to sleep. Nothing to see. Move along. Easy to fool the weak-minded.

They even popped the Russel 2000. Leave no stone unturned. This is clearly securities fraud. They don't care. But that's the USA today. We are screwed. They know it and they are laughing all the way to the bank at the ease with which the Sheeple parade to the slaughter. This isn't even a challenge for them. Must be boring...

[TigerLikesRooster]

I think you have a point. Three indices all moving more or less in the same fashion until Nov. 4.

It is possible to surmise that there is a market boost by somebody. However, after the election, it is possible that some would try to shore up the market on Obama's behalf. This kind of activity go on both sides. Certainly, Obama's win did not help. Business folks know that he won't do anything to give them any kind of hope now. Except bailouts. He will be more likely to add heavy overhead on beleagured economy, stunting eventual recovery momentum.

What Obama would end up doing is to take away dynamic momentum from economy with his misguided policies. U.S. will be more or less stagnating on the baseline a lot longer.

What we see now is the combination of pre-election boost running out and Obama reality hitting investors.

[palmer]

There is a large combination of reasons for the actions of the market up to and past the election. The election or the plunge team or the people worried about Obama had less effect than the usual carry trade unwinding and markets tanking in Asia and Europe.

The current action looks like a bit like a double bottom but we'll see if it stays at this low or punches through. Looking at SRS though, there's a (un)healthy new spike into nosebleed territory. Lots of hedging going on with that fund, but I'm not sure it's more than what was warranted by the market drop today. People still don't seem that worried from what I have seen.

[jersey117]

LOL. I saw a homeless guy at Penn Station this morning wearing a “yes we can” cap.

[Attention Surplus Disorder]

I think you’re off base ascribing the behavior of the market to forces other than utterly fundamental and emotional/sentimental. Eg; economic; perhaps more pointedly, financial ones. (They are not the same: Financial is pushing paper around; Economic is actual productive activity, to be painfully brief) You’re focusing on the stock market and the stock market is an effect, not a cause, especially in the last 2-3 weeks, where we approach a serious breaking point. (I’ll get to my point on that later)

IMO, the stk market became ambivalently relieved when the long and overly drawn out campaign achieved a decisive result that didn’t result in a 45 day round of lawsuits. The market hates uncertainty. Now, one can speculate as to whether the market likes or dislikes the threat of Obamas’ tax changes, and there’s probably something to that, maybe 15% of the total decline.

But I think there are much, much bigger factors at work. (So does the market) First, the economic picture has been deteriorating for a solid year, from late 2007. At first, it simply appeared that huge piles of mortgage debt were headed for a trainwreck on falling home valuations; together with falling home sales that appeared to hit some kind of “no buyer left” upper bound. Remember? That was when subprime was contained, there were only 1-2-3% of morts in foreclosure, and blah blah. That extended to maybe March of 2008, although the serious 1-day plunge in Jan ‘08 that preciptated a .75 point rate cut also was quite telling. In hindsight, of course. All this time, banks have been writing off tens of billions, quarter after quarter...saying they were well capitalized and then FAILING mere days later...or, selling themselves to other parties for a third of their stated valuations mere days later. Bear Stearns, Fannie Mae, Freddie Mac, Indy Mac...then WaMu and Wachovia. (I may not be getting those in their chronoligical order)

IMO the real “tell” was the March failure of Bear Stearns. This took the “shock and awe” up a solid notch. The realization dawned upon the market that it was NOT THE FACE VALUE of the bunko mortgages; behind those morts was a much larger market in default swaps. Normally, I cannot buy a fire insurance policy on my neighbor’s house, hoping to benefit should it burn down. But in this case, one could. And one of the bggest sellers of same was AIG. Because in good times, it seemed like free money to write insurance on the 100-year flood plain.

It soon became clear that many, many companies, even countries, scattered everywhere you can imagine, had invested in dodgy mort-backed paper AND insured against default by buying enormous qtys of default insurance. And, they were braying about financial soundness because after all, they had insurance on their high-yield debt paper written by AIG, biggest insurer in the world. What could go wrong?

Answer: Everything. It gradually became clear, along with the realization that it wasn’t the face value of morts that was at risk, but 30 times the face value of mortgages, due to the leverage embedded in the types of deals Bear had written. (Many of those are still completely frozen, by the way) Now...3% of morts in default turn into [effectively] 90% of morts in default.

Next the TED spread literally expoded in early-mid Sept 2008. A long time indicator of ease of intrabank lending, this went from “manageable” basis points over LIBOR to 450 points over LIBOR, and all time high and STAYED there; it might have gotten higher during the 1987 crash for a day.

http://www.bloomberg.com/apps/cbuilder?ticker1=.TEDSP:IND

The not-so-well-known interpretation of this index generated serious consternation. The index going this high meant that “suddenly” the mortgage problem was becoming an “economic” problem. Because, letters of credit for actual goods on actual ships could not be issued. Commercial loans could not be rolled over. These are kind of “vitamins” for biz activity, these things usually happened just as a mater of course. But it became clear that the banks either a: didn’t trust other banks enough to lend (understandable, because the lending baks knew well what utter crap THEY had on THEIR bal sheets and had little reason to suspect any other bank was any different) or b: the lending bank couldn’t afford to reduce their reserves by making any such loans as they were precarious shape themselves.

OK, so this starts Hank Paulson into Congress with lethal weaponry, threatening armageddon. This lying POS terrorist applies the weaponry to the foreheads of the Congress and extracts a $700 billion bailout package under the guise of helping out homeowners in distress. NOBODY understands that he is in truth intending to bail out FOREIGN banks (primarily the Chinese) who have threatened to stop buying Tsy debt if the Hankster will not backstop the bad agency (FNM,FRE) debt they hold. That is not a toothless threat, since the US needs $2 billion daily to finance our budget deficit.

Paulson pays off the Chinese, with a goodly shot to his banker pals, later announcing that he’s changed his mind and is instead buying preferred equity stakes in most of the banks in the US.

The result of all this is: Hank Paulson has absolutely shredded confidence, has proven to be a liar, and has shown that NOTHING he has done has had much more than a few-day effect. Oh yeah, somewhere in there is the AIG bailout. Which was increased by about 50% along the way.

OK, now for the last 2-3 weeks.

http://www.tickerforum.org/cgi-ticker/akcs-www?getimagenr=12685

The TNX (10-year Tsy) has collapsed in yield. This means (among other things) that commercial credit is simply not trusted, that people will pay anything for safety and are not lending. This will grind biz activity to a virtual halt. We are quite likely headed for a deflationary depression here, and the levels of the stock market that are in play are ominous. First, SPX 768 = 2002 lows are within very easy reach. And there is NOTHING BUT AIR underneath those levels; meaning that we could go back to 1985 levels on a technical basis. Talking about DJIA 3000-4000, SPX 450. Don’t think it can happen?

[4Liberty]

[Freedom_Is_Not_Free]

As always, I enjoy reading your informative post and that one was no less informative, but basically a summary mostly of what I already knew, in concept if not in vivid detial.

That said, light volume days are tossing this market around to the tune of 5% swings. I myself find it hard to believe in conspiracies and the ability of behind the scenes entities to manipulate the markets, but that single week ramp job leading up to the elections is as clear as daylight to me. You don't believe it, and that is fine. I find the coincidence too pat, even as I can't see how the manipulation could be done.

I was trying to make a simple point. Many are saying "look how the market is falling since Obama was elected." All I said was, "look how the market fell back to where it was the week before the election." To my eyes, it does not so much look like the market fell back after the election, as much as it looks like the market was propped up before the election.

I'm just looking at the chart in a raw fashion and not applying logic. Just by looking at the chart, there is an aberration in the 7 days before the election that pushed all of the indeces up up over 15% in one weeks time.

I agree that the entire trend of the past 2 years is based on fundamentals of a liquidity crisis and now economic recession. I don't dispute that in the least.

I'm confining my discussion to the time period from October 27, 2008 to today. Three weeks time. And in that 3 weeks time, the markets rose over 15% in the week leading up to election day, beginning an immediate and steady decline the day after the elections until the present, and I don't see that patter as any coincidence whatsoever. My concusion is that somebody, some group, propped up the market in the week before the election. The only motivation anyone could have to do this would be to support incumbent politicians, since economic blood in the streets would be bad for any sitting politician.

Furthermore,

I sincerely appreciate your intelligent and mature view and my own view in this reeks of nonsense. But I can't separate my view from this localized aberration on the chart that strikes me as FAR too coincidental based on fundamentals alone. Random buyers just happened to feel that the week of complete uncertainty when McCain was closing in on Obama in the polls, during a severe economic downturn, just happened to be the perfect time to buy up stocks and was the only significant rally we've seen in the last 3 months. I just can't buy it.

Here is the 3 month chart for the DOW. Outside the single one week period from Oct. 27 to Nov. 4, there is no period longer than 3 days when the market held its value. Every rally was 2 or 3 days and length, leading to lower lows. That period of one week is a clear aberration to me that when combined with the precise timing so CONVENIENTLY performed the one week before the election, just makes me think "conspiracy". Sorry for my unreasonableness. I am not saying it can't possibly be based on fundamentals. I am saying it stinks to high heaven and looks suspicious as hell and I would not put it past the shadow powers to have ramped up the markets artificially in the week before the election. Why is this impossible to believe?

In fact, below is a SIX MONTH chart of the DOW and NO WHERE in the entire six month period, except that single week ending exactly ON election day, does the DOW gain either 1400 points or 15% of it's value after or over a 7 day period. In EVERY other instance over this six month period, every rally is either shallow, or the bigger ones collpse in two or three days, usually to lower lows. I'm sorry, but that ramp job looks suspect as hell to me. Very fish. I just can't make myself ascribe that complete aberration in this market to coincidence, as in buyers just happened to have been interested in mass buying of equities during that single crucial week. I can much more easily believe that the market was manipulated and the manipulation ended abruptly upon the return of all incumbents to their cherished posts. You may very well be right, but I'll go to my grave believing what I do. Call me dumb...

[Freedom_Is_Not_Free]

I do agree that we could see a deflationary depression. I do agree that your bottom numbers for the DOW and S&P at 1985 levels are possible. I don’t think they are likely but I agree they are certainly possible. The 2002 lows are all but guaranteed. I wouldn’t be surprised to see DOW 5000+ and S&P 600. Two months ago I thought the DOW would stay above 7000 and the S&P above 770. Things are deteriorating so rapidly, I won’t be surprised to see the S&P at 600.

“Don’t think it can happen?” Yes, I do think it could happen.

[brytlea]

A post I can agree with! (I usually turn off the tv when he comes on, he is a waste of time and makes my blood boil to boot—thank goodness he’s not on the right side).

[Attention Surplus Disorder]

2 day 1K DJ point dump. There’s some change we can believe in. Urk.