Black Monday – Stocks Dive on Weak Mfg. Data

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.

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9 Responses to Black Monday – Stocks Dive on Weak Mfg. Data

  1. Tina says:

    Wish there was something positive to say.

  2. Libby says:

    Oh, fer heaven’s sake, Jack. With unemployment still (really) at 10%, 14000 was absurd, 16000 obscene, and when we’re down to 10000 … maybe … the unemployment figure will truly start, actually, to drop.

    Greedy, bubble-making pigs.

    • Post Scripts says:

      Libby you have a point, the market was out in front of reality, but then it always is. You know the old saying, “But on the rumor, sell on the news.”

      Tina, there is no doubt in my mind that Obama’s policies have failed us and left us worse off in the event of a return to recession.

  3. Tina says:

    You talking about the QE “pigs” propping up the market in a vain attempt to stimulate the economy? Or the government student loan “pigs” creating a credit crisis by pushing loans? How about those greedy tax the rich “pigs”…what has that done to improve the situation?

    In fact…how’s this hope and change working out for us so far? Go ahead…tell the truth! You’re thrilled right?

    Amd make that unemployment figure over 30%.

  4. Dewey says:

    The crash of 2016….just wait the game is rigged

  5. Tina says:

    Way back in 1880 at the beginning the DOW was steady at 62.76 and “peaked” in the summer of 1890 at 78.38. Then took a dive (28.48) in what became known as the Panic of 1896. Several panic periods followed. By 1910 the DOW had reached a lofty 99.05. And so it has moved, up and down, boom followed by set back throughout the decades. By October 1996 the DOW had climbed much higher and on the 14th broke 6000. By the time the dot.com bubble took full form, May 3, 1999, the Dow breached 11,000 at 11,014.70 The decade gains exceeded 315% going from the recession low of about 2,753 to 11,497. The Dow was tanking through 2001 losing losing well over 1000 points between January 2 and September 10. That was followed by the third largest one day drop in history (on 911) when the DOW fell 684.81 points. Shortly after that it quickly regained all of the lost ground and closed above 10,000 level for the year. The remainder of the decade saw ups and downs but crashed through 11,000, 12,000, 13,000 and 14,000. We dipped all the way back to the 6,000 neighborhood and today we’ve broken 16 but have dipped back to 15,372.80.

    The current world wide problems, including our own are causing a lot of people to have concerns…big concerns. We may be in for a pretty bad crash…again. The biggest worry warts predict it will make the last one seem like a holiday. Time will tell but given the history of the market 16,000 is not at all unexpected or obscene. It just means that we’ve come a long way since the invention of flight.

    Jack I’m sure you are as prepared as anyone can be as are we. Waiting fro the shoe to drop can be hairy at times. No wonder you’ve taken up painting!

  6. Harold says:

    Actually Tina, I heard that that Jack took up still art painting over golf for one reason only, and that for him, painting involved fewer strokes..:)

  7. Tina says:

    Oh boy…can’t wait to hear Jack’s retort! Very funny Harold.

  8. Post Scripts says:

    Harold understands my golf game quite well, but the way I look at it …if I shoot 115 and the other guy shoots 72, I’ve got far more game in for the money.

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