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Is this a Bear Market

tompalm

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Is this the start of a down market. The index today shot through the 200 day moving average and broke recent levels of support of 1260 and closed at 1254. The technical gurus are stating time to sell. What do you think.

from Reuters: http://www.reuters.com/article/2011/08/02/us-markets-stocks-idUSTRE7701KB20110802
The broad-based index fell for a seventh day and crashed through its key 200-day moving average in an ominous sign for markets. The seven days of losses mark the longest losing streak since October 2008.
 

Elan

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From the recent rally in treasuries and muni's it appears as though many are taking a defensive posture.
 

jaym

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Is this the start of a down market. The index today shot through the 200 day moving average and broke recent levels of support of 1260 and closed at 1254. The technical gurus are stating time to sell. What do you think.
from Reuters: http://www.reuters.com/article/2011/08/02/us-markets-stocks-idUSTRE7701KB20110802
The broad-based index fell for a seventh day and crashed through its key 200-day moving average in an ominous sign for markets. The seven days of losses mark the longest losing streak since October 2008.

As measured by the S&P 500 Index, performance just turned into negative territory YTD. Generally, a bear market is defined by a 20% decline across broad market indices. Do expect more volatility in the coming weeks and months.
However, in my opinion, this is not the time to sell all your equity exposure. Begin by carefully evaluating your current portfolio, and if you haven't already, try to reposition into some defensive strategies.
Do you have assets that have performed well over the past 12-24 month period? If so, what are they?
Would you be able to harvest some gains anywhere or possibly utilize available cash, held in low-yielding instruments, such as CDs, savings accounts, to invest in other strategies? Bank interest rates may languish for a quite awhile longer....<1%.
How risk-averse do you consider yourself and how limited to short-term losses?

Start by reviewing your overall net worth. Include current mutual funds, stocks, bonds, etc. and consider opportunities to increase or add incremental exposures (say 5-15% each) such as commodities ETFs or funds, dividend-paying ETFs or funds, investment-grade bond funds, TIPS (treasury-inflation protected securities), even some Emerging Markets (I know, more risk) to create a possible hedge against U.S. recession re-emergence. Returns for investors may be derived from some EM countries (Africa, Latin, etc.) over the next several years but choose carefully....
The debt deal jitters, lackluster economic data, and poor job growth are weighing heavily on financial markets now. Markets hate uncertainty and we've had plenty to go around lately.
Try to resist the urge to follow the crowd here and sell when things are heading down. Just as you should resist heavy buying when markets are skyrocketing upward.
Be opportunistic and patient, rather than reactionary and emotional. And buckle up, we may be in for a rough ride ahead....
 
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easyrider

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The DJI chart looks like the last time it slipped below 11500 in August 2008 it then tanked to about 7100 to a bottom in February 2009. It took about 22 months to get back to 11500.
 

Elan

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This is getting pretty ugly. DJIA down another 2% today.
 

pgnewarkboy

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Fed meeting on tuesday. May have significant impact on stocks. There are many technical gurus. Right now many are saying this is a correction similar to last summer.
 

tompalm

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Fed meeting on tuesday. May have significant impact on stocks. There are many technical gurus. Right now many are saying this is a correction similar to last summer.

I think you are right, about 75% of the time, the market will bounce around like this during August and start going up in September. It should be a buying opportunity and soon time to start buying. I already have my list of what I want to buy.
 

stevedmatt

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I dumped about 30% of my portfolio into fixed back in May. Lucky timing, but I should have made it 100%. Between yesterday and today, I have reinvested that 30% into blue chips mostly and shorted some gold and silver. Hopefully my timing is right again. I think I may be a little early, but I don't need that money for quite some time, I think.
 

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If a "bear market" means it's time to crawl into my cave, and take a nap for a little bit, and crawl out later to see what happened, then I think it is.
 

tompalm

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Monday could be interesting and another bad day in the market. In addition to the news below, news out of Europe on Sunday night will have a big impact according to Cramer.

http://www.cnbc.com/id/44040167

S&P downgrades US credit rating from AAA


WASHINGTON (AP) — The United States has lost its sterling credit rating from Standard & Poor's.
By MARTIN CRUTSINGER - AP Economics Writer | AP – 5 mins ago
RELATED CONTE
The credit rating agency on Friday lowered the nation's AAA rating for the first time since granting it in 1917. The move came less than a week after a gridlocked Congress finally agreed to spending cuts that would reduce the debt by more than $2 trillion — a tumultuous process that contributed to convulsions in financial markets. The promised cuts were not enough to satisfy S&P.
The drop in the rating by one notch to AA-plus was telegraphed as a possibility back in April. The three main credit agencies, which also include Moody's Investor Service and Fitch, had warned during the budget fight that if Congress did not cut spending far enough, the country faced a downgrade. Moody's said it was keeping its AAA rating on the nation's debt, but that it might still lower it.
One of the biggest questions after the downgrade was what impact it would have on already nervous investors. While the downgrade was not a surprise, some selling is expected when stock trading resumes Monday morning. The Dow Jones industrial average fell 699 points this week, the biggest weekly point drop since October 2008.
"I think we will have a knee-jerk reaction on Monday," said Jack Ablin, chief investment officer at Harris Private Bank.
But any losses might be short-lived. The threat of a downgrade is likely already reflected in the plunge in stocks this week, said Harvey Neiman, a portfolio manager of the Neiman Large Cap Value Fund.
"The market's already been shaken out," Neiman said. "It knew it was coming."
One fear in the market has been that a downgrade would scare buyers away from U.S. debt. If that were to happen, the interest rate paid on U.S. bonds, notes and bills would have to rise to attract buyers. And that could lead to higher borrowing rates for consumers, since the rates on mortgages and other loans are pegged to the yield on Treasury securities.
However, even without an AAA rating from S&P, U.S. debt is seen as one of the safest investments in the world. And investors clearly weren't scared away this week. While stocks were plunging, investors were buying Treasurys and driving up their prices. The yield on the 10-year Treasury note, which falls when the price rises, fell to a low of 2.39 percent on Thursday from 2.75 percent Monday.
A study by JPMorgan Chase found that there has been a slight rise in rates when countries lost an AAA rating. In 1998, S&P lowered ratings for Belgium, Italy and Spain. A week later, their 10-year rates had barely moved.
The government fought the downgrade. Administration sources familiar with the discussions said the S&P analysis was fundamentally flawed. They spoke on condition of anonymity because they weren't authorized to discuss the matter publicly. S&P had sent the administration a draft document in the early afternoon Friday and the administration, after examining the numbers, challenged the analysis.
S&P said that in addition to the downgrade, it is issuing a negative outlook, meaning that there was a chance it will lower the rating further within the next two years. It said such a downgrade, to AA, would occur if the agency sees smaller reductions in spending than Congress and the administration have agreed to make, higher interest rates or new fiscal pressures during this period.
In its statement, S&P said that it had changed its view "of the difficulties of bridging the gulf between the political parties" over a credible deficit reduction plan.
S&P said it was now "pessimistic about the capacity of Congress and the administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics anytime soon."
One analyst suggested the downgrade might move Congress to take concrete steps to fix the nation's budget problems.
"It's a downgrade and it's bad, but if it spurs more conversation about bringing down spending and maybe more intelligent tax policy, it could be a good thing in the long run," said Frank Barbera, a portfolio manager of the Sierra Core Retirement Fund.
The Federal Reserve and other U.S. regulators said in a joint statement that S&P's action should not have any impact on how banks and other financial institutions assess the riskiness of Treasurys or other securities guaranteed by the U.S. government. The statement was issued to make sure banks did not feel that the downgrade would affect the amount of capital that regulators require the banks to hold against possible losses.
Before leaving for a weekend at Camp David, President Barack Obama met with Treasury Secretary Timothy Geithner in the Oval Office late Friday afternoon.
The downgrade is likely to have little to no impact on how the United States finances its borrowing, through the sale of Treasury bonds, bills and notes. This week's buying proves that.
"Investors have voted and are saying the U.S. is going to pay them," said Mark Zandi, chief economist of Moody's Analytics. "U.S. Treasurys are still the gold standard." He noted that neither his parent organization, Moody's, nor Fitch, the other of the three major rating agencies, have downgraded U.S. debt.
The ratings agencies were sharply criticized after the financial crisis in 2008 for not warning investors about the risks of subprime mortgages. Those mortgages were packaged as securities and sold to investors who lost billions of dollars when the loans went bad.
Japan had its ratings cut a decade ago to AA, and it didn't have much lasting impact. The credit ratings of both Canada and Australia have also been downgraded over time, without much lasting damage.
"I don't think it's going to amount to a lot," said Peter Morici, a University of Maryland business economist.
Still, he said, "The United States deserves to have this happen," because of its clumsy handling of fiscal policy.
 

easyrider

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The lack of employment and the fear of becoming unemployed has caused the consumer to stop spending which is hurting the economy. Unemployment is still over 9% with many people not counted as they are not recieving an unemployment check. The real percentage of unemployed may be closer to 15%.

Real estate foreclosers are still driving property values down in many markets. Even though refiancing rates have droped to under 3.5% interest for a 15 year mortgage many people are not interested or do not qualify for a loan.

Another round of bailouts for European countries is just arround the corner.

Looking ahead, the stock market's underlying technicals tend to indicate that a sharp break to the downside is a sure thing. Many indicators have led the market lower and now price will likely play catch up with factors causing the conditions.

I guess that puts me in the Bear boat. There are some stock picks that are going to do good but picking investments like a mutual fund, which owns many stocks, might be a loser in the upcoming months. imo..
 

tompalm

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The lack of employment and the fear of becoming unemployed has caused the consumer to stop spending which is hurting the economy. Unemployment is still over 9% with many people not counted as they are not recieving an unemployment check. The real percentage of unemployed may be closer to 15%.

Real estate foreclosers are still driving property values down in many markets. Even though refiancing rates have droped to under 3.5% interest for a 15 year mortgage many people are not interested or do not qualify for a loan.

Another round of bailouts for European countries is just arround the corner.

Looking ahead, the stock market's underlying technicals tend to indicate that a sharp break to the downside is a sure thing. Many indicators have led the market lower and now price will likely play catch up with factors causing the conditions.

I guess that puts me in the Bear boat. There are some stock picks that are going to do good but picking investments like a mutual fund, which owns many stocks, might be a loser in the upcoming months. imo..

I think you are right. We will get a bounce up in the near term (not Monday), but if things don't work out in Europe, or at home with our government making the right budget cuts, we will be lower in a couple months.
 

pgnewarkboy

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Monday could be interesting and another bad day in the market. In addition to the news below, news out of Europe on Sunday night will have a big impact according to Cramer.

http://www.cnbc.com/id/44040167

S&P downgrades US credit rating from AAA


.

First, I have an extremely low opinion of Cramer. Cramer is all about being sensational and getting ratings to sell junk on TV. He is the Lady Gaga of the financial world. Second, the "downgrade" will probably cause an impact in stock prices early on. Of course, the facts are that the U.S. Sold its debts immediately after the "ceiling" raised at historically low rates. That is because investors immediately demonstrated their confidence in the U.S. Third, IMO S&P has thrown a spotlight on their already crticized rating ability. They base their assumption about the "future". They don't know the future of what the U.S or any other nation will do. The ratings agencies are extremely arrogant in making any assumptions about the political actions of sovereign nations. I think this will backfire on all the ratings agencies. Every nation has to take a hard look at the hubris, of a handful of people, about whom we know nothing, making decisions about sovereign entities future actions.
 

vacationhopeful

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Question: Are these financial ratings companies selling subscriptions for this information? Is that how they make their money? So, if one company is of the opposite opinion, would it increase their sales?

They sure seem to have gotten a lot of FREE advertising, didn't they?
 

pgnewarkboy

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Question: Are these financial ratings companies selling subscriptions for this information? Is that how they make their money? So, if one company is of the opposite opinion, would it increase their sales?

They sure seem to have gotten a lot of FREE advertising, didn't they?

They get paid from the companies they rate. That is why they played a role in the derivatives debacle. They rated junk derivates as triple A or double A. They had no idea what the underlying value of the derivatives were - namely mortgages ready to be foreclosed.
 

easyrider

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Its starting to look like this morning is going to start bad. DOW futures are off by 200 points. Foreign markets were off as well.
 
L

laurac260

Second, the "downgrade" will probably cause an impact in stock prices early on. Of course, the facts are that the U.S. Sold its debts immediately after the "ceiling" raised at historically low rates. That is because investors immediately demonstrated their confidence in the U.S. Third, IMO S&P has thrown a spotlight on their already crticized rating ability. They base their assumption about the "future". They don't know the future of what the U.S or any other nation will do. The ratings agencies are extremely arrogant in making any assumptions about the political actions of sovereign nations. I think this will backfire on all the ratings agencies. Every nation has to take a hard look at the hubris, of a handful of people, about whom we know nothing, making decisions about sovereign entities future actions.

I have to disagree with this completely. So does my investment advisor. She feels the downgrade was a long time coming given the direction we have been headed in, and also feels Fannie and Freddie should have been downgraded years ago (they were downgraded today).

She works for a large investment group that calls itself "conservative" in their investment strategies. The CEO of this group arrived at his new position at this investment firm with is own desk in tow, one that he had owned for 20 years. Our advisor left "Swallow the Competition, Inc" when they had gobbled up the previous investment company she worked for, and proceeded to raise fees on everyone "just because they could". We moved with her, and have taken much softer hits as of late than many folks have been taking.

I think the writing is on the wall as to what the "future" is for this country. We will be painfully in debt until we finally decide to stop spending like drunken sailors.
 

vacationhopeful

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Dow down 634 today (Monday). Guess I will turn on the TV. This is not good.

And plan a much bigger vegetable garden next spring.
 

stevedmatt

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Looks like I was too early for sure. Lost about 4.5% of my portfolio today.
 

Carol C

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Gold went over $1700/ounce today and some are predicting $1860-2500 by year's end. So...where is it folks go panning for gold in the US and do they have any timeshares there? :whoopie:
 

Passepartout

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Its starting to look like this morning is going to start bad. DOW futures are off by 200 points. Foreign markets were off as well.

Oh if the real McCoy would have just been -200! Looks like you were concerned enough to be up posting on TUG at oh dark thirty.

An order to move to cash and/or gold at the close of markets last Friday would have been good. I didn't.

Many are considering this a long awaited correction and buying opportunity. Now to have something left to do some buying with.

Jim
 
L

laurac260

Oh if the real McCoy would have just been -200! Looks like you were concerned enough to be up posting on TUG at oh dark thirty.

An order to move to cash and/or gold at the close of markets last Friday would have been good. I didn't.

Many are considering this a long awaited correction and buying opportunity. Now to have something left to do some buying with.

Jim

Correction my foot. "Many" of these ostriches need to finally take their head out of the sand and take a good, long look around.
 

Kozman

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I remember back in March of 2000 when the market dropped 20%. I thought it was just a correction and rode it all the way down. Proceed at your own risk.
 

Pit

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Earnings have been stellar and should continue to be strong for awhile (at least two more quarters). I think there will be good buys between now and earnings season. In my opinion we will be higher by year-end.
 
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