Stock Market Takes a 500 PT Nose Dive!

by Jack

We saw the market begin to falter early in the week with several days of unusually heavy selling and this had investor’s nerves on edge, but today’s drop was devastating for many portfolios caught by surprise. Meanwhile China continues to foolishly try to micromanage their wildly gyrating stock market rather than let the market float and find its own level. Looks like China’s financial woes have finally hit the US markets. Now couple that bombshell to ongoing economic implosion in Greece, the saber rattling by North Korea’s Kim Jong Un and it was the making of a perfect storm for a sell-off and brother did it sell!

The market was recently trading at 18312.39 (5/19/15) and now it’s dropped to 16459.75. We haven’t seen a sell off like this since Aug. of 2011. The severity of todays rout suggests there’s more to come on Monday.

Trading broke through resistance at 17K with conviction. The stop price considered by many traders is 16310, and should the market break through that level on Monday it could trigger another selling frenzy as investors flee the market. We’re only 150 pts away from that dreaded trigger and after today’s over 500 pt drop it wouldn’t take much to reach this arbitrary stop loss number.

The oil industry is one of the worst sectors and it continues to be battered unmercifully. Chevron, Exon, etc., all nose diving. Chevron has gone from $134 a share a year ago to $75 a share today. Given their rapid decent, oil stocks should be called Hindenburg stocks.

The E-T-F OIL (fund) recently saw $24 a share and at the time it was thought to be a fairly safe play as a sector fund, but it’s now trading at $7.50 per share with no relief in sight. This is ugly for any stock, but an ETF? This is scary and the falling share price represent billions of dollars lost. Another example is a premier oil drilling company, Transocean (RIG). RIG has lost about 70% of its value in the last 11 months and this is unfortunately not unusual among off shore drillers!

Watch the action on Monday… hope you are invested wisely!

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One Response to Stock Market Takes a 500 PT Nose Dive!

  1. Tina says:

    Good reporting Jack. Tomorrow could bring just about anything. I’ll add to the mix the Iran situation, the student loan bubble, the EPA’s ridiculous regulations…there’s so much it’s frightening.“>Zero hedge gets into the weeds to inform about specific well known transportation companies…worth the read:

    transportation companies prosper when the economy is rocking and rolling. However, they are among the first to feel a business slowdown when things turn downward.

    My bashing of the transportation industry is just as much of a warning about the overall economy as transportation stocks. Do you have a contingency plan to protect your portfolio when things turn ugly?

    The best time to prepare for trouble… is before trouble arrives.

    As is often the case we’ve never been here before. QE up the wazoo is something new as is the war on oil and coal. Encouraging mass intrusion without legal process is also new. I understand our government is back to making home loans with lowered requirements. Dodd/Frank is killing small banks…independent financial advisers will be hit this year also.

    Time to hunker down and wait out the storm.

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