Today’s drop of 678.91 points to the close of 8,579.19 on the DJIA is actually a drop of 1,746.19 points since Friday’s close. That represents nearly a 17% drop over four days and it begets the argument of "HOW MANY MORE DAYS TO ZERO AT THIS SAME RATE?".
Oversold conditions and selling can go, and we are not underthe belief that the markets truly zero out. That is essentially amathematical impossibility. But at this same sustained rate and goingback to Monday as the first day of the official meltdown, then the DJIA at ZERO isonly 19.6 more trading days.
A friend in the trading business sent me these two charts todayillustrating the key trend lines for the entire market going back tothe early 1980’s. Thanks Keith, even if the news looks like watchingthe end of the world.
Here is the good news, if you think there can be any good news right now. The markets are in oversold levels not seen in most of our careers, including 1987. The VIX closed up at 63.92. This is a new chapter in the play book. We’d also point out that when you read of issues like this and the "countdown to zero" that historically it has been a major buying opportunity in the markets. Let’s all hope history holds true.
Below are the following DJIA closing bell levels:
- Oct. 8 9,258.10
- Oct. 7 9,447.11
- Oct. 6 9,955.50
- Oct. 3 10,325.38
Jon C. Ogg
October 9, 2008