by Jack Lee
UPDATE: Monday 3 Feb 2014 1 pm PST – DOW DROPS A STAGGERING 325 Points at close!
It’s an old saying in real estate and the stock market, “So goes January – so goes the year”. Well January was bust and true to prediction, February is starting out like the Denver Bronco’s opening play in Super Bowl 2014.
Investors are scared and the sell off reflects it. Too many red flags are popping up and this caused the DOW to drop 1000 points in January. This is far more than mere profit taking or a routine reset to a bull market.
Today the sell off in stocks increased to a frenzy! The DOW was down 286 points and the NASDAQ shed over 100 pts as of 11:55 am PST. This is bloody awful and it has triggered fears of a global recession, before we’ve even recovered from the Great Recession!
Last week China was scaling back production and today US manufactures surprised the market with weaker-than-expected reading on manufacturing data, this double whammy has investors running for the sidelines.
The Nasdaq plunged by the most in over 8 months today and broke all the way back to unchanged from the December taper decision of the Fed. Gold and Silver surged, adding 1% on the day as the USD lost 0.25% on the day (led by the 1% strength in the JPY). VIX smashed to 14 month highs over 21%. Credit deteriorated but stocks are catching down.
January was the slowest rate of expansion in eight months as the pace of new orders sharply decelerated, according to the closely followed ISM index (Institute for Supply Management). “That index sank to 51.3% from 56.5% in December. That’s the lowest level since last May. Economists surveyed by MarketWatch had expected the index to drop to 56%.”
Market technicians are watching the action very closely now because we’re starting to see computerized trading and that’s a bad thing for the little investors. This is an automatic sell off that occurs when the DOW, NASDAQ, etc., fall below a certain resistance point. Then heavy selling by these algorithmic based computer programs causes the market to plunge and it’s Katie bar the door! These fail safe computers control about 40% of the market.
At the core of the economic failure are Obama’s policies that have American’s underemployed, with 50 million on food stamps. The tax the rich policy has been a dismal failure. What it’s done is opposite of it’s objective. Simply put, Obama’s economic recovery, QE and debt have limited the opportunities for growth and job creation. America’s economy appears to have stalled and is in serious danger of a return to recession, but this time with a ton of debt weighing on us.