Bernanke 1PM today.

[Matt24SPFL]

Quote from michaelscott:

"The world is different now." Wasn't the world different in 1987 then it was in the 1920s? Wasnt the world different in 2000 then it was in 1987? In every notable pullback, panic and/or crash the world was different then before yet they all seemed to happen and usually with the same chart patterns.

The only 'crash' was in the 20's. These minor corrections are good for the market, more volatiliity.

A rate hike could spark a 7-8% correction. I wouldn't be surprised to see The Fed do that within the next 8-12 months. Everything is so inflated, something needs to diffuse this market.

 

[noddyboy]

Quote from michaelscott:

I want to address both posts above:

1.) "The whole world is bullish now." The whole world was bullish before every notable pullback, panic and/or crash. They were bullish in 1987 and the 20s. They were bullish in 2000. In fact, in 1987 the world markets and the DJIA had good runs before the crash. The indexes had been churning higher and then all of a sudden, whoosh...

2) "The world is different now." Wasn't the world different in 1987 then it was in the 1920s? Wasnt the world different in 2000 then it was in 1987? In every notable pullback, panic and/or crash the world was different then before yet they all seemed to happen and usually with the same chart patterns.

BUT

1) 1987 could have been a program trading error, which is why it bounced so quickly. Circuit breakers now exist due to 1987. It is not possible for futures to fall as quickly -- artificial or not, this is a fact.

2) Where were people calling for 1987 to occur right before it occured?

 

[michaelscott]

Yes, many, Marc Faber being one of them.

Quote from noddyboy:

BUT

1) 1987 could have been a program trading error, which is why it bounced so quickly. Circuit breakers now exist due to 1987. It is not possible for futures to fall as quickly -- artificial or not, this is a fact.

2) Where were people calling for 1987 to occur right before it occured?

 

[noddyboy]

Quote from michaelscott:

Yes, many, Marc Faber being one of them.

Thanks...I didn't know that...I am bearish.

Still, what do you think about the PPT and the circuit breakers? The economic clearing price for the 1987 selloff was not at the bottom. It is just a matter of refusing to allow trading until more buyers come in.

 

[michaelscott]

....plus circuit breakers did nothing to stop the market from bubbling up or bubbling back down in 2000. If a circuit breaker is hit, then trading will pause for a certain period of time and then when things get turned back on the selling will most likely resume.

A bit of information why they call it a "circuit breaker" is because the computers that were trading back during that time were being smashed, disconnected or wiring being cut to stop them from trading as no switches existed to turn them off. The reason why no switch existed is so they could not be accidentally turned off...thus fire axes were sometimes used to turn them off.

 

[JamesVU2000]

February 27th was a stark reminder of what can happen. That was a cascading waterfall, program trading disaster. Anyone read Barton Biggs article on msn?

 

[myminitrading]

Fed may talk tough, the vulnerability of the US Dollar has changed my views right now.

Look at commodities, they can't puss out now, it's to risky, the will start talking tough to support the dollar.

A break of 2004 support may cause a bit of panic.

 

[S2007S]

Circuit breakers.....



:eek: :eek: :eek:


I say forget circuit breakers, let the market do what it needs to do.

 

[S2007S]

Quote from myminitrading:

Fed may talk tough, the vulnerability of the US Dollar has changed my views right now.

Look at commodities, they can't puss out now, it's to risky, the will start talking tough to support the dollar.

A break of 2004 support may cause a bit of panic.

The dollar is going to break 2004 support, I just dont know why it wouldnt at this point.

 

[S2007S]

July 10, 2007
Sub-prime warning drives dollar to record lows
Sterling soars to $2.024 and euro to new high after Standard & Poor's warns it may downgrade US mortgage debt
Robert Lindsay

Sterling reached a 26-year high against an ailing dollar today while the euro hit an all-time high after rating agency Standard & Poor's warned that it may downgrade $12 billion of debt backed by US sub-prime mortgages.

Standard & Poor’s said that it may cut its ratings on 612 residential mortgage-backed securities, affecting $12 billion in debt, as part of an overall change in its methods for evaluating such debt.

This may force institutions who have pledged to buy only investment-graded debt, to sell their holdings, triggering a wider devaluation of corporate bonds.

Profit warnings from DR Horton, the house builder, and Home Depot, the home improvements firm, added to concerns that trouble in the US subprime market — catering to borrowers with problems in their credit history — could spill over to the wider US economy and led to a sell off of corporate bonds and the dollar.
Background

* Mortgage crisis forces Carlyle to cut float price

* Biggest US housebuilder says market weakening

Related Links

* Sub-prime warning drives dollar to record lows

* Crisis-hit Bear Stearns moves fund chief aside

The dollar had already been under broad pressure due to expectations that the Federal Reserve will keep interest rates on hold for the rest of the year, while other central banks, including the Bank of England, are expected to raise them.

By mid-afternoon, sterling had risen as high as $2.0245 its highest since 1981.

The euro set record peaks against the dollar above $1.37.

Economic data out today, including a narrowing British trade deficit and buoyant retail sales growth, painted a picture of a reasonably robust economy, supporting expectations of higher rates.