Stock-Market sell-off

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Anatomy of a Stock Market Sell-Off

By , Defense + Tech Specialist, Money Morning • @Robinson_STI -

market sell-off

"Mr. Market" is the analogy Warren Buffett uses to help investors understand the market as though it were a person.

Usually, Mr. Market is as rational as the efficient market we all dream about. But Mr. Market also suffers periods of manic depression - as the recent stock market sell-off shows.

Today I'm going to use technical analysis to show what we're up against as investors and why I continue to say don't cash out now...

This Bear Market Indicator Is Off the Mark

By , Global Credit Strategist, Money Morning • @MichaelELewitt -

Investors are taught that bear markets can't occur unless the Treasury yield curve inverts - that is, unless short-term interest rates are higher than long-term interest rates.

And that can only happen if the Federal Reserve raises the Federal Funds rate, which is the short-term rate that the Fed controls.

But that measure may be off the mark this time, and here's why...

How to Trade the Ebola Stock Market Sell-Off

By , Chief Investment Strategist, Money Map Report -

stock market sell-off

Editor's Note: We're sharing this Total Wealth with you because we believe that the ongoing Ebola outbreak will continue to be disruptive to markets all over the world. But as we've seen many, many times before, out of chaos comes opportunity. Here's Keith...

I believe Ebola may be the most serious threat to humanity since the bubonic plague of the Middle Ages. Already it has spread to a dozen countries, including the U.S., and more than 4,000 people are dead. According to Dr. Bruce Aylward of the World Health Organization (WHO), mortality rates are rising and now sit at 70%.

This outbreak is more grim proof that the global trend of war, terrorism, and ugliness is indeed a growth industry.

That's the next trend we'll be discussing, though it's easily my least favorite both personally and professionally. But it's very, very important. So please stay tuned for that in the weeks ahead.

In the meantime, Ebola clearly qualifies as "ugliness." It has the potential to be a serious market event before it's brought under control. Recent trading suggests, in fact, that it already is by virtue of the fact that some $1.5 trillion has already been wiped from the exchanges on Ebola related fear driven trading.

So we need to talk about it logically - no hype, no conspiracies, and no nonsense. I mention those things because they're all emotional inputs that can cloud your thinking and have a seriously negative impact on your money.

Here are the tactics you need on hand for the Ebola market event...

Stock Market Sell-Off: The Chart That's Keeping Wall Street Up at Night

By , Associate Editor, Money Morning • @DavidGZeiler -

For months, Wall Street insiders have passed this chart around amongst themselves and nervously discussed whether it foretells a major stock market sell-off.

The chart compares the path of the current Dow Jones Industrial Average over the past year and a half to the Dow's moves over the 1928-1929 period.

While the Dow is trading at a much higher level now than in the 1928-1929 period, the pattern is eerily similar to the path that led to the worst stock market crash in Wall Street history, right up to the recent stock market sell-off and recovery.

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This Stock Market Sell-Off Will Bring a Great Opportunity to Buy

By , Money Morning -

The stock market sell-off has made for a rough start to 2014 - and February could bring more of the same.

The S&P 500 Index fell by 3.56% in January, its worst monthly drop since May 2012, and was off to its worst start in February since 1933. The Dow Jones Industrial Average plunged more than 300 points on Monday, Feb. 3, and had its worst start since 1982. And the Nasdaq Composite Index started the month down 106 points, or 2.61%.

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Why This Stock Market Sell-Off Will Continue

By , Money Morning -

A global stock market sell-off sent the Dow Jones Industrial Average down more than 200 points Monday in morning trading.

Money Morning Capital Wave Strategist Shah Gilani joined FOX Business' "Varney & Co." to answer the big question: Will the stock market sell-off keep going?

Watch Gilani's full interview to find out how two huge factors will keep pushing down markets that have been falling since Ben Bernanke triggered triple-digit losses last week.

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How to Bank Triple-Digit Gains During a Stock-Market Sell-Off

By , Associate Editor, Money Morning -

Monday's stock-market sell-off was a frightening affair that sunk 94% of the stocks listed on the New York Stock Exchange (NYSE). Every single stock in the Standard & Poor's 500 Index fell, and the 635-point freefall experienced by the Dow Jones Industrial Average was its sixth-largest point drop ever.

But in the face of this bloodbath, subscribers to Shah Gilani's Capital Wave Forecast were treated to gains of 456%, 455%, 371%, and 197% on four of their holdings.

Just how did Gilani manage to engineer four triple-digit gains in the face of a near-market meltdown?

He predicted reversals in both the U.S. and Chinese financial markets, employed a "put" option strategy for insurance - and then watched as his predictions came true.

"If I'm going to buy insurance, I want the best insurance at this price," said Gilani, a retired hedge-fund manager who is also a respected expert on the global financial crisis. "Part of a good cost-structure analysis is timing, which is tough. So I polished my crystal ball and said: ‘If something bad were to happen, when would that be?' I decided August, and chose some lesser-expensive puts."

Gilani's plan paid off with these four winners:

  • A 455.56% gain from Goldman Sachs October 2011 $85 Puts (GS111022P00085000), bought June 3 for 45 cents and sold Aug. 9 for $2.50.
  • A 455.24% gain from SPY August 2011 $115 Puts (SPY110820P00115000), bought for $1.05 on June 10 and sold Aug. 8 for $5.83.
  • A 371.26% gain from FXI $40 August 2011 Puts (FXI110820P00040000), bought May 10 for 87 cents and sold Aug. 8 at $4.10.
  • And a 196.72% gain from QQQ August 2011 $50 Puts (QQQ110820P00050000), bought June 10 for 61 cents, and sold Aug. 8 for $1.81.


"The days of putting together a portfolio and sleeping on it are over," said Gilani. "You could wake up to its value cut in half. Vigilance is the order of the day."



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Time to Profit, Not Panic, from the Stock-Market Sell-Off

By , Associate Editor, Money Morning -

Thursday's stock-market sell-off has injected investors with more fear and uncertainty - but this is not the time to panic.

The Dow Jones Industrial Average on Thursday fell 513 points, or 4.3%, and regained only 0.54% Friday to close at 11,444.61. The Standard & Poor's 500 Index fell 60.27 points, or 4.8%, Thursday and slipped another 0.06% Friday to close at 1,199.38.

But that may be just what the market needed.

"This market was badly in need of a sell-off, so what's happening now is long overdue," said Money Morning Chief Investment Strategist Keith Fitz-Gerald.

Not only was the stock-market sell-off bound to happen, it's going to create new profit opportunities that could offset the losses many investors absorbed during the correction.

"We may take some small losses, but we're not going to get killed," said Money Morning Contributing Editor Shah Gilani. "There are going to be life-changing opportunities for us in the very near future and the next 18 months. I'm talking seriously huge, massive opportunities."

Our financial experts have put together the following tips on surviving the market roller coaster ahead:

  • Focus on large-cap dividend stocks - and mind your protective stops.
  • Don't forget gold, silver, and oil.
  • And get ready to buy - the best companies, which still have strong earnings, will be going on sale.




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The Real Reason for Yesterday’s Stock-Market Sell-Off

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

On Aug. 11, 2010, the Dow Jones Industrial Average plunged 265 points, or 2.5%.

This Tuesday - almost exactly one year later - the Dow dropped ... 265 points.

Those carbon-copy stock-market sell-offs weren't a coincidence. - as yesterday's (Thursday's) 512-point drop and further weakness will prove.

Although the Dow is more than 700 points higher than it was at this time a year ago, U.S. stock prices are currently following virtually the same trading pattern that they did in 2010: Last year and again so far this year the early-year gains came to a halt in May, and the markets then fell through August.

But here's where the story gets scary.

Last year, the U.S. Federal Reserve halted the stock market's summer swoon by opting for a second round of quantitative easing - an initiative most of us refer to as "QE2."

A year later, even after a week heavy with stock-market sell-offs, there's no guarantee we'll see another Fed rescue mission. And this time around, without a massive injection of quantitative easing - the much-ballyhooed QE3 - it could finally be all over for the stock market.

Where the Stimulus Really Went

Stocks have endured a real beating in recent days - yesterday's stock market sell-off was the worst one-day plunge in U.S. stock prices since December 2008.

When the Dow plunged 265 points on Tuesday, it was because of an unexpectedly large drop in the Institute for Supply Management's (ISM) Purchasing Manager's Index (PMI). The 265-point August 2010 sell-off was precipitated by the U.S. Federal Reserve's negative outlook on the American economy.

But both the August sell-offs were preceded by strong run-ups in stock prices. Those run-ups weren't sparked by an improved economic outlook - which is how it usually works.

Instead, the bull market that powered U.S. stocks off their March 2009 bear-market lows was the result of the massive monetary stimulus put in place by Washington and the U.S. Federal Reserve.

The U.S. monetary stimulus - billions of dollars worth- went into banks and other financial institutions - and not into the economy.

That's why stocks have benefited - even in the face of an economy in which growth has been lackluster, if not downright flat.

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