Selloff is Happening

[KC Scott]

The small investors that have been buyin the dips - thinking the Santa Claus rally would happen are buying right into large selling by the Institutions. Nasdaq has been cratering this entire week. Next week will be ugly as well.

Why are the big guys selling? Growth for all the indices is now forecast in single digits or 2007.
In other words, there is a recession coming.
The Fed can't help, - No rate cut on the table till at least the summer.

There may be a brief spurt back up the first two weeks of 2007 - But 3rd week of January, the market is poised for a major drop.
I'm not making the mistake of forecasting how much, but it will get ugly.

Just an FYI for those interested.

[battery chucka' one]

I haven't noticed this. Nvidia was way up earlier this week. It fell on Wednesday, Thursday, and Friday, but still is holding at a rather robust 37. It always ebbs and flows like that. When it goes up 1.50, I can predict when it'll go down 1.00. Like I said, I haven't noticed this selloff. I will not say that you're wrong. However, my money shall remain in the market just the same (all 1000 of it). Thanks and we shall see.

[KC Scott]

Hey BC,

The overall market is about trends, and the trend we were seeing since Thanksgiving is called Churn.

Churn means stocks are staying in a range, up down, up down) not making any upward break, but not selling off.

That changed this week. The straight sell days on NVDA are the exact same as what happened on the Naz the last 3 days. NVDA is closing in on it's 20 day moving average. This is typically a support level and the stock should break back up - especially since it is coming off a recent high near 39. This is also the support trendline since the stock bottomed in early Oct.

The next level of support is at 35. Here's my opinion, if it closes below 36.71 Monday, keep a real close eye on it. Beacuse of it's rise from 17 in July, there will be a real rush to sell if it starts to collapse.

If support at 35 breaks, it could drop all the way to 28.

The outlook for the whole semi conductor industry is weak right now, and even though NVDA is one of the strongest, it will follow the rest of that group.

Good Luck

[KC Scott]

BC - hope you were able to save some profit on NVDA.

A lot sold off today, including Oil, Raw Materials and technology (semiconductors).

The Fed has told the market don't expect a rate cut for the next couple quarters, and the language implied a possible rate hike due to inflation concerns. They also worried about the overall business slowdown (How's that for doublespeak?)

The reason the selloff was so violent today in these sectors was much of the rally of the last 5 months was based on the ability of the economy to get the so called soft landing. Now it's lookin more like possible recession heading into the spring.

[battery chucka' one]

BC - hope you were able to save some profit on NVDA.

A lot sold off today, including Oil, Raw Materials and technology (semiconductors).

The Fed has told the market don't expect a rate cut for the next couple quarters, and the language implied a possible rate hike due to inflation concerns. They also worried about the overall business slowdown (How's that for doublespeak?)

The reason the selloff was so violent today in these sectors was much of the rally of the last 5 months was based on the ability of the economy to get the so called soft landing. Now it's lookin more like possible recession heading into the spring.

Nah. We bought 10 at 37 and are currently down in NVDA. It's alright. I was a bit shocked when I checked on stock prices this morning (talk about understatements). No worries, though. What goes down must come up and all. The only way we can lose the money would be if we now sold. Hence, we'll hang on for a bit. The money we have in there is there. I just feel bad for the poor guys who had millions tied up in the market. Is this all based on stockholders panicking? That's what it seems like.

[KC Scott]

Nah. We bought 10 at 37 and are currently down in NVDA. It's alright. I was a bit shocked when I checked on stock prices this morning (talk about understatements). No worries, though. What goes down must come up and all. The only way we can lose the money would be if we now sold. Hence, we'll hang on for a bit. The money we have in there is there. I just feel bad for the poor guys who had millions tied up in the market. Is this all based on stockholders panicking? That's what it seems like.

That's a great attitude to have. To be honest with you I've forgotten what it's like to just buy something and just roll with the ups and downs.

NVDA makes a great graphics card, part of the bail out on them was beacuse BRCM was whacked by a downgrade. Even though NVDA did'nt get downgraded, the stock had such a run up, there was a lot of nervousness as to when the sell off would happen. Eventually someone pulls the trigger and it's like a snowball going downhill. The whole chip / semiconductor segment is under a lot of selling pressure.

NVDA is a stock I want to own, when I think the market is done correcting. Best of luck to you guys BC.

[poptart]

You should have read my PM, chucka.

Or .... at least given a courtesy reply.

Sucks for you, 'tard.

[battery chucka' one]

Nah. We bought 10 at 37 and are currently down in NVDA. It's alright. I was a bit shocked when I checked on stock prices this morning (talk about understatements). No worries, though. What goes down must come up and all. The only way we can lose the money would be if we now sold. Hence, we'll hang on for a bit. The money we have in there is there. I just feel bad for the poor guys who had millions tied up in the market. Is this all based on stockholders panicking? That's what it seems like.

That's a great attitude to have. To be honest with you I've forgotten what it's like to just buy something and just roll with the ups and downs.

NVDA makes a great graphics card, part of the bail out on them was beacuse BRCM was whacked by a downgrade. Even though NVDA did'nt get downgraded, the stock had such a run up, there was a lot of nervousness as to when the sell off would happen. Eventually someone pulls the trigger and it's like a snowball going downhill. The whole chip / semiconductor segment is under a lot of selling pressure.

NVDA is a stock I want to own, when I think the market is done correcting. Best of luck to you guys BC.

Thank you much. I think that there might have been a bit of over-saturation in the chip market. Perhaps this fall will be a way to get rid of some dead wood. Then, when the price is nice and down, we can maybe buy some more (maybe at 22 a share) and then watch as it goes up again. Maybe it'll also get the casual investor (i.e. buy at 8:00, sell at 12:00) out of the market for NVDA. From what I've heard, NVDA's been such a leader in the industry, unless the entire thing literally implodes, they'll be there and strong. For that reason, we're hanging in there.

Another question. What's BRCM?

[KC Scott]

BRCM = Broadcom another chip maker that has had good run. They are more focused on WiFi chips but like I said, the market doesn't differentiate when a sector gets whacked

[poptart]

Looks like today's the day.

China fell down and went BOOM.

[KC Scott]

From the "I knew I'd be right eventually" file

Yea China getting whacked hard .... and India is going down next - look for Bombay to tank tomorrow or at least by end of week

Today's just the first spike down in the US markets.

The US markets will rally back to the previous level (maybe just a bit higher) then the next dip will take it down further.

Here's Greenspan's view: http://www.boston.com/business/globe/ar ... recession/

Greenspan sees possible recession
He details signs that expansion is ending

By Associated Press | February 27, 2007

HONG KONG -- Former Federal Reserve chairman Alan Greenspan warned yesterday that the US economy might slip into recession by year's end.
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The economy has been expanding since 2001, he said, and there are signs the current economic cycle is coming to an end.

"When you get this far away from a recession, invariably forces build up for the next recession, and indeed we are beginning to see that sign," Greenspan said via satellite link to a business conference in Hong Kong. "For example in the US, profit margins . . . have begun to stabilize, which is an early sign we are in the later stages of a cycle."

"While, yes, it is possible we can get a recession in the latter months of 2007, most forecasters are not making that judgment and indeed are projecting forward into 2008 . . . with some slowdown," he said.

Greenspan said that while it would be "very precarious" to try to forecast that far into the future, he could not rule out a recession late this year.

The US economy grew at a surprisingly strong 3.5 percent rate in the fourth quarter of 2006, up from a 2 percent rate in the third quarter. A survey released yesterday by the National Association for Business Economics showed that experts predict growth of 2.7 percent this year, the slowest rate since a 1.6 percent rise in 2002.

Greenspan also said the US budget deficit, which for 2006 fell to $247.7 billion, the lowest in four years, remains a concern.

[Mister Bushice]

The dow is 500 points down today so far.

The naysayers have gotta give you props on this one. I wonder what excuse mvscal will have?

[poptart]

Despite today's big meltdown, the market is still up from early Nov, when Scott made his call that a crash was coming.

[KC Scott]

Despite today's big meltdown, the market is still up from early Nov, when Scott made his call that a crash was coming.

4 Moths of gains were taken out in one day.

And crashes don't happen in a day - But they begin in a day.

Listening to the talking heads on CNN in the airport - "Oh, everyone will be buying - this is just computer trading" - It's all song and dance.

The market may get some of the loss back - as much as 63% - but then it will fall again right through today's floor

[poptart]

Maybe you're right, I dunno.
Wait and see.

I DO know that Whitey should have stayed OUT when he was advised to do so a few weeks ago.

[KC Scott]

Here's what I'm talking about:





Both the DOW and SP500 lost all gains since the end of November in one day.

I'm not into this for playing around or board cred - This is serious capital preservation - And a heads up to those who are interested.

It's been tough as hell being 100% cash since Nov. and seeing the markets overstep their technical bounds. It would have been real easy to pull a wagon and just jump back in, but that's what the herd does.

And then the fuckers on wall Street that pull the plug on the liquidity and today is the result.

[KC Scott]

From Moneywatch:

By John Shinal, MarketWatch
Last Update: 6:28 PM ET Feb 27, 2007

SAN FRANCISCO (MarketWatch) -- As a reminder to investors, most economists are not predicting the end of the boom and bust cycles that have always been a part of the capitalist system.
The latest leg of the current bull market, which had pushed the Nasdaq Composite Index and other broad indexes pretty much straight up since August, has made it easy to forget that.
So has the glut of liquidity that for several years has helped power markets around the globe higher and led to a wave of private-equity buyouts in the U.S. that have helped prop up share prices here.
Cheap money, combined with a record run for U.S. corporate profit growth and bubble-like euphoria about China, had lulled investors into complacency of historic proportions.
Before Tuesday, it had been 45 months since the S&P 500 had suffered a one-day decline of 2% or more. During the past 75 years, such days have occurred eight times a year, on average.
Then came the market plunge, when we were once again reminded that things that are too good to last never do.
Investors who think this was a one-day correction should consider that averages usually revert to their long-term means. I'm not sure exactly how many 2% daily drops we'll see during the next several years as that occurs, but my best guess is "lots."
Commerce is driven by human needs and emotions - people buy when they think they will get something in return for their money - from big-screen TVs to houses to stocks -- and sell when they convince themselves that holding what they have will cost them.
For that reason, markets will always be as capricious as human nature, which when it comes to investment decisions repeatedly cycles between fear and greed.
Several weeks ago, this column reminded readers of something MarketWatch first reported in July - that the American-traded shares of Chinese Internet companies were at bubble-like valuations and that their recent problems could be a sign of wider declines to come. See full story.
Tuesday, the trouble began in China, where the main stock index plunged 9%, the most in a decade. Yet many of the fundamental factors that have been helping drive U.S. stocks higher are beginning to falter.
Consider the following:
Profit growth decelerating
The string of 18 consecutive quarters of double-digit year-over-year growth in the operating profits of S&P 500 companies already ended in the fourth quarter or will do so in the first.
The fourth-quarter number currently stands at 10.03%, with more than 90% of the companies in the index reporting results. In the opinion of S&P analyst Howard Silverblatt, once all the companies file their 10-K annual statements with federal securities regulators, "We're probably not going to make it."
Granted, 10% profit growth is not a weak number by historical standards, but the tide has clearly turned.
For all of 2007, S&P expects profit growth of 7.53%, about half of the 15% figure for 2006.
Decelerating profit growth is a sign of a business cycle that is long in the tooth, as former Federal Reserve Chairman Alan Greenspan said Tuesday.
Home equity falling, loan defaults rising
For years, U.S. homeowners have been funding their spending with the rising equity in their homes, which functioned like an ATM machine that you could sleep and eat in. That's over.

On Tuesday, just before the U.S. market meltdown, S&P reported that U.S. home prices fell 0.7% in the fourth quarter, the most since 1992.

With the U.S. annual savings rate below zero, which means consumers in this country spend more than they make in income every year, it's a mystery what will power consumer spending now that the ATM machine is broken.
At the same time, mortgage lenders afraid of a rise in the number of defaults are tightening lending practices, removing a significant chunk of home buyers (and mortgage refinancers) from the market.
Several lenders who specialize in so called sub-prime loans have already seen their shares pummeled after warning of higher losses. They'll soon have plenty of company.
"We think those problems will spread to other lenders," Silverblatt says.
The U.S. home market has been on a 15-year tear. Anyone who thinks a bull run like that works itself out in just one year may want to go back and look how long it took the stock market to recover from the late 1990s tech bubble.
The answer is - seven years next month, and counting.
An era of cheap money always ends badly
As MarketWatch columnist Mark Hulbert pointed out Tuesday - also before the big market plunge - the issuance of U.S. junk bonds reached record levels last year.
That was great for companies that wanted easy debt to fund investment.
However, periods of cheap money are usually followed by runs of rising bankruptcies, which signal economic weakness. To read how that dynamic fits into stock market cycles, read Hulbert's column here. See full story.
I could go on to mention how the current yield curve, which compares long-term interest rates to short-term ones, is signaling a 42% chance of recession during the next year, according the economists at the Federal Reserve.
Or how many investors who sold shares in Shanghai on Tuesday expect legislators in that country to try to rein in its economic expansion, which has been cruising along at an annual growth rate of 10% lately.
For tech investors wondering whether to buy, hold or sell right now, I suggest you pull up a three-year chart of the Nasdaq and others tell a similar story - all are showing dramatic short-term weakness after nice runs of at least six months.
U.S. stocks may go up on Wednesday. They may even go up the day after that. But the odds are good, given the deterioration of the fundamentals listed above and three-year chart trends, that sometime in the next six months most Nasdaq stocks will be lower than they are today by at least 5%.
Next week: the Q1 profit outlook for tech companies. End of Story
John Shinal is the technology editor of MarketWatch in San Francisco.

[Trampis]

Kinda harsh I must say,Ive still made a few bucks from the first of the year till now,but Im supposing that will be gone after tomorow.

[KC Scott]

Kinda harsh I must say,Ive still made a few bucks from the first of the year till now,but Im supposing that will be gone after tomorow.

So far the market has gained back 20% of yesterday's loss.
I don't know what your holdings are, but you should be able to escape with minimal damage.
The stocks that will get pounded the hardest, initially are the most speculative issues - the highest PE ratio companies.

Good Luck

[War Wagon]

I DO know that Whitey should have stayed OUT when he was advised to do so a few weeks ago.

:?

Whitey?

Now where did that come from 'tart?

Oh, and after checking my Hartford portfolio after yesterdays sell-off, seems I actually gained a bit.

[KC Scott]

Oh, and after checking my Hartford portfolio after yesterdays sell-off, seems I actually gained a bit.

Bad news dave, those reports are one day behind usually.

No way, unless you are in a Short fund, it gained yesterday

[KC Scott]

There may be a brief spurt back up the first two weeks of 2007 - But 3rd week of January, the market is poised for a major drop.
I'm not making the mistake of forecasting how much, but it will get ugly.

Missed this by a month - OK time for a self high five

[poptart]

No frickin' way you gained, Wagon.

I just felt like tossin' a Whitey your way because you didn't listen to me ..... or Scott.

[War Wagon]

Ok, the numbers are in and I did take a bit of a hit.

The rebound (eventually) will be epic. Let's hope it doesn't take too long.

[Trampis]

Kinda harsh I must say,Ive still made a few bucks from the first of the year till now,but Im supposing that will be gone after tomorow.

So far the market has gained back 20% of yesterday's loss.
I don't know what your holdings are, but you should be able to escape with minimal damage.
The stocks that will get pounded the hardest, initially are the most speculative issues - the highest PE ratio companies.

Good Luck

Looks like I gained back about 10% of what I lost on my mutual funds from Amerifund and Fidelity. I had a 3.5% drop in value.The one mutual fund I have that still looks good overall for the year is FLVCX.It WAS singing along at a 30-50% clip for the year!

[War Wagon]

Ok, for the week I lost about 2% of my 401k's value. Could've been worse, I suppose, but damnit I hate seeing those numbers go south like that. It took me probably 3 months to accrue that, and then *poof*... it's gone in less than a week. Oh well, I knew the risks going in.

I'm nervous now, so moved it all from the stock funds into a fixed account that's paying a guaranteed whopping 3.45%.

Yeehaw! I'm such a party animal.

[poptart]

I don't know how you lost merely 2% last week, Wagon.
The S&P lost in the neighborhood of 4.5% last week.
The Dow was prolly similar, and the Naz was likely worse .... I'm pretty sure.

Unless you were holding a HELLUVA large portion of your portfolio in bond funds, David Copperfield has nothin' on you.

...... or maybe it's Pinocchio.


I dunno.


Btw, 3.45% is highly uninspiring.

Ask Scott for his advice.
If you want to play it safe, there is a better way than that.

[Trampis]

I lost about 7.5% from the 23 of Feb. to the 2 of Mar..And I'm down about 3% from where I started the year. Hope its done doing what its going to do.

[War Wagon]

Hope its done doing what its going to do.

I hope so also, but I'm not willing to risk it at this point. It could fall a lot further.

[poptart]

We're not at the bottom.
Check back in a month or so.


Just my opinion, of course.

[KC Scott]

We're not at the bottom.
Check back in a month or so.


Just my opinion, of course.

You are correct - No bottom close - The ugly truth is we are just starting the Bear Market.

That's not to say we won't have an occassional up day - there will be small rallies, but any strength will be sold into.

What's funny is there is a whole slew of TV types out there saying minor correction / buying op and the like who have no clue, or are shills of the Institutionals. It's an ugly game and it's going to get uglier. There are only a few sources, IMO, that are honest (read independent with no financial ties) that can be trusted to give a non-bias appraisal of overall conditions. Investors Business Daily is one of those I trust. They called the Bear market last Tuesday after the big drop.

What really suprised me was we didn't get a bigger bounce on Wednesday. This market's trend was to buy every "dip" and with little, no bounce that really erased any doubt I had this was the major selloff I'd been seeing in the charts since November.

One scenario is the market bottoms hard going into the summer - with the fed finally giving in and announcing rate cuts.
That won't be the bottom - but at least it will signal we are close.

That's not a prediction - I have to watch the tape to tell if we're getting anywhere close to capitulation