Last Friday I posted on the ITM Trading Facebook page an article that was surmising the large drops in the Dow Jones stock market industrial average on Thursday and Friday. These stock market drops delete hundreds of points each and they reminded me of the volatility that I saw in the DJIA back in 2008 when I was a senior analyst on the floor at ITM Trading. One day the stock market would be down 400 points and the next day it would be up 300 points. There was no rationality in the stock market at all.
it is now becoming apparent to all that the global economies are in trouble. Further, we need to question what central banks can or cannot do about it. In Tuesdays MMU, we will take a look at the slowdown taking place in the global markets and the continuing rout in stocks. Finally, we’ll take a look at what’s happening in the gold and silver markets. Questions? Call Us 888-696-4653
In fact, I remember the talking heads and stock market pundits on CNBC and other financial channels, as well as all of the news channels, trying to put every possible positive spin imaginable on the dark and bleak financial stock market news that they were delivering while trying to say everything with a smile. And every now and again there would be a Rick Santelli or a Jim Cramer or a Bob Pisani who would scream about the reality of the stock market and the severe consequences about what they were having to report.
I imagine (although I did not get to see it firsthand) that the talking heads of 2015 had eerily similar looks on their faces yesterday when the Dow Jones stock market plummeted 1000+ points in early opening trading. These are the kind of huge stock market swings that can spell trouble very quickly and not only the United States stock markets, but in the stock markets scattered around the globe.
I read an interesting article last night that listed the largest down days and corresponding percentage drops of the Dow Jones stock market over the last few decades. The date and drop that I find very interesting came on October 27, 1997 when the Dow Jones stock market closed down over 554 points. This was a drop of over 7% in just one day. What I find particularly interesting about this day of stock market trading is that there would probably never be another day on Wall Street were the stock market will actually allowed to drop according to the amount of selling that is actually being initiated.
What I’m talking about is this, after this particular day in the stock markets there was a decision made in Washington DC to quickly assemble a group that would come to be known as the “Presidents Working Group” and these individuals would be tasked with slowing down and hopefully reversing any dangerously negative trends emerging in the stock markets.
The Presidents Working Group, or PWG, would have many tools available to them in order to help potentially stem the flow of financial blood in the stock market should another Black Monday occur, such as using federal funds (you can read that as tax dollars) to enter the stock markets and make purchases and buy stocks in what are really false trades designed to prop up the stock market that is overvalued and unregulated in the first place.
The PWG can also halt trading in order to give the stock markets a chance to “cool down and come to its senses”. Although, I would imagine that while the stock markets are closed the PWG is busy trying to reverse the negative trends in the stock market at nearly any cost to you and I as Americans, taxpayers, and probable investors.
Stop and think about this for a moment. The banks and investment companies that are now deregulated and relatively poorly watch-dogged, rather than being allowed to fail when they realistically should fail because they had been poorly run and usually over-leveraged, are instantaneously propped up in the stock markets with taxpayer funds because since 1987 the president of the United States and those that surround him in financial circles understand that the stock markets have become very fragile, and that one large company or conglomeration or stock market sector may be big enough to start a financial avalanche that neither Wall Street nor Washington DC can dig us out of.
Who knows what the results of yesterday’s buying and selling on the Dow would have been, had there not been market interference, and at who knows what cost to the taxpayer? Could the stock market have dropped 1200 points lower, 1300 points lower? This doesn’t seem unreasonable if the stock market can drop over 1000 points within the first hour of trading.
After all, most trades executed these days by the largest banks and trading firms are done so automatically by computer trading algorithms, and it doesn’t take artificial intelligence to see that once a serious slide in the stock market begins the algorithms will be forced to sell at some point in order to either lock in profits or limit losses, or for that matter to lock in gains made by anticipating a stock market slide and buying stocks to sell short. All in all, once a deep stock market selloff begins more signals to sell will be given by automated trading programs, and it may be up to the PWG to step in and keep the stock market from doing what it naturally wants to do and correct to sustainable levels.
When you consider that the largest one-day closing point drop for the Dow Jones industrial average was 777 points, on September 29 of 2008, then perhaps you can imagine what would happen not only in the American economy but in the world economy if Wall Street were to suffer a 1200 or 1300 point down day in the Dow Jones stock market. In fact if you want to step out of your imagination and into American history you can look at the stock market crash of 1929 and see that even though the stock market crash began with a bang in 1929, the stock market did not bottom out quickly, but continued to decline for quite some time. In essence, because the stock market of 1929 in the ensuing years was much less manipulated and had no PWG to prop it up, the stock market was allowed to find bottom and retrace itself to its actual value.
What we have today in our stock markets has been called everything from a ticking time bomb to financial Armageddon, and every now and again, like yesterday we see sparks too close to the fuel tank and men in black suits rush out of the shadows to stomp on the sparks and tell you that everything is going to be okay.
If you would rather hold gold coins and gold bars in your retirement portfolio, and benefit from holding rare American gold coins in your estate planning program, rather than continue to participate in this rigged sham of an open stock market system where the rich get bailed out, and the common man gets bailed in, then contact and ITM Trading representative today.