So everyone's been talking about this famous company in the stock market: the
Dow Jones Industrial. Maybe you've heard of it? Well this company, along with
Standard and Poor's 500, serves as a major reflection of the United States' stock market's status. Speculation has risen since the beginning of October for a market bottom, but analysts say that prices may even still drop. The Dow company has had a roller coaster of a ride the past 6 months, and the past 10 years, and even the past 78 years, but can this history predict a market bottom, or a bottomless market?
According to Adam Shell of
USA Today, the Dow Jones has dropped 41% since its 13,000 point peak in April. But even after a devastating plumett of 700 points on October 10, 2008, the Dow managed to recover 128
points before closing. "Since then, many signs that have signaled market bottoms in the past have surfaced: record levels of fear; a surge in investor pessimism; and the fact that the Dow and Standard & Poor's 500 index have stayed above their intra-day Oct. 10 panic lows," Shell writes. But when a definite bottom will occur is the question.
Todd Salamone, an analyst at
Schaeffer's Investment Research, says the Dow bottomed in October 2002 at 7200 points and March 2003 at 7500 points. "It's not inconceivable that we go back and test the lows we saw in 2002 and 2003," says Salamone to Shell. Even after the implosion of hedge fund
Long Term Capital Management in September 1998, the Dow bottomed out between 7400-7500 points. And of course the epic low of the Dow in 1932 spurs a mixed emotions of hope and dread.
So what do you think America? Is there any immediate signs of the markets bottoming out? Or is the worst still to come?
3 comments:
Well I think the market will continue to see some unstable highs and lows until definite action is taken with enforcing the rescue plan. Once the economy can get back on its feet, hopefully the market can expect gradual stabilization and increases. It is the immediate highs and lows in the past that have caused such drastic economic woes and reflect on a mismanaged economy.
Brown Man,
I believe that there is definitely going to be a significant drop in the market because of the economic crisis but I also don't expect it to be as bad as it was in the 1930's with the Great Depression. Just a few days ago the stock market was up 800 points so while it will have its ups and downs, I believe that it will eventually over time it will stabilize and slowly return to normal. That's not to say that it won't go down first, but nobody wants to go into a recession and the government is trying every method to pull us out of this crisis. The problem is, it is just buying time. Hopefully the rescue plan will do its job and get out economy up and running again.
I think we are beginning to bottom out, but this does not mean that it is an end to volatility. One day the market goes up several hundred points and the next it drops several hundred. There is good news in Europe as markets are starting to recover and they had a significant rally yesterday. European markets could be a sign of what is to come for the US. Also I believe that the presidential election will serve as a market booster. If Obama wins the election, investing confidence will increase because citizens believe that Obama will make a change that would benefit the economy.
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