Dow Nearing 10,000

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The Evolutionary Ape's picture
The Evolutionary Ape
Status: Bronze Member (Offline)
Joined: May 31 2009
Posts: 62
Dow Nearing 10,000

I noticed the Dow is pretty close to dropping below 10,000.  It hasn't done so since October 2008 around the whole Lehman and Bear Stearns fiasco.  What also struck me as odd is the rate at which it is dropping.  It's given up over 600 points in 10 days.  The last time it dropped like that was in March 2009 when it didn't stop until it reached it's 12 year low of 6626.  Even today it gave up 50 points after the joke of GDP growth made headlines. 

Could all be nothing, but I found it odd and wonder if the market is about to drop again.

docmims's picture
docmims
Status: Platinum Member (Offline)
Joined: Jun 17 2009
Posts: 644
Re: Dow Nearing 10,000

80percent chance to drop. is my guess.  The Fed says it's dollar swaps with other central banks ends this month (feb).  These swaps were to provide liquidity to banks to make them lend to each other (the LIBOR rate)..  This allowed foreign banks to keep their LIBOR rates low at the expense of a falling dollar.  Now the foreign banks will have to buy dollars to make loans causing a rise in the dollar.  Therefore everything bought with cheap dollars -- stocks, bonds, commodities, gold -- will possibly come under pressure.

This assumes the fed will do what they say they are going to do and not change their minds which we will find out after the fact.  I am currently out of the stock market (totally),  short paper gold, and long physical gold.

I am not an investment professional and do not give investment advice.  If you are thinking of shorting the market, just remember you might be right on the direction but lose due to the volatility.  I wouldn't play it with the rent money.  If you were planning on taking a big vacation, cancel it and play it with that money.

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