Stocks Plummet Whats Next?
 Submitted By Michael Michaud
Don't Believe The Recovery Hype – The Worst is NOT Over Free Report
These financial headlines below early this morning are mostly all negative. Months ago, there was a lot of positive economic headlines mixed in with the negative news too. My point is news is reported in a way to try to explain why things happened the way they did. As far as making money in the markets, its meaningless in my opinion. What matters is who thinks what, what positions do they have in the markets and what positions are they going to be taking in the markets. When a market gets to one-sided where everyone is a bull or a bear, it can easily flip over like what happened yesterday. For example, its like everyone standing on the same side of a small overloaded boat.
CNBC Headlines
Somebody Should 'Hang' the NYSE: Jim Rogers
High-Speed Trading Glitch Costs Investors Billions
Wall Street Goes from Overbought to Deep Correction
Euro Will Collapse Like Tower of Babel: Economist
Cramer: What the Dow’s 1,000-Point Drop Means for You
Geithner to Hold Call with G7 on Greece, Markets
Market Pros: Position For Larger Sell-Off
UK Faces Government Without Single Party Majority
US Senate Thwarts GOP Attack on Consumer Watchdog
P&G Trades Won't Stand: NYSE CEO
The World's Biggest Debtor Nations
Gulf Oil Slick Makes First Land Strike, Off Louisiana
Bloomberg Headlines
Stocks Dive Worldwide on European Debt Concern; U.S. Futures, Bunds Rally
Banks Shun Lending, Driving Overnight Deposits With ECB to 10-Month Record
Bull Market Intact for Biggest U.S. Fund Managers After Drop; Birinyi Buys
SEC Said to Probe Causes, Exploitation of Yesterday's Stock-Market Turmoil
Pound Weakens to 13-Month Low as Election Results Signal Hung Parliament
BP Oil Spill to Be Biggest Energy Insurance Loss in 20 Years, Catlin Says
IPOs Derailed by Market Plunge as Americold, Ryerson Shelve Initial Offers
Cameron Wins Most Seats as Brown Signals Fight to Stay U.K. Prime Minister
Senate Rejects Consumer, Bank-Size Amendments to U.S. Financial-Rules Bill
A Deadly Bearish Big Picture
I'm looking a A Deadly Bearish Big Picture on my charts right now. With all the recovery hype that was going on this last 52 weeks, I was wondering how far the market was going to climb after the March 2009 lows before it took a correction, and what a massive correction it took yesterday. Whether it was a trading glitch, the Greece debt crisis and riots, or whatever, it looks like the recovery optimism hype just reversed to panic and fear again in a big way.
Bearish to Heavily Bearish to Extremely Bearish
When the markets started moving up from the March 2009 lows and hit the 50% Fibonacci retracement level I started going from bearish to heavily bearish, and then it continued up to the Fibonacci 61.8% retracement level and I started going extremely bearish selling BHP Billiton short last Monday. Then yesterday all hell broke lose to the downside. It's like winding up big spring as tight as you can get it, and then releasing it. It unwinds hard and fast.
Our May 03, 2010 Blog Post I Said
"The Fibonacci 61.8% retracement level on the DJIA is 11,241.70 and on Monday April 26 it hit 11,205.03. The Fibonacci 61.8% retracement level on the S&P500 is 1,226.24, and on April 23 it hit 1217.28. Is this the top or a time for a correction and consolidation before another up move? We are going to find out soon enough."
Correction or Bear Market?
The market is at least due for a correction of some kind and then it could continue higher again. I'm betting its headed much lower and very possibly longer term to new lows. The Bulls can say stock price valuations are cheap. Yea sure, and they could keep getting cheaper too, just like prices go too high and continue higher.
Profit Opportunities Going Forward
I suggest selling short on a lot of over-bought stocks and buying into a lesser of the currency evils right now with the US Dollar being the winner the rest of the year along with food commodities and other very select assets. I would suggest now that very possibly almost all assets of stocks, real estate, energy oil, hard commodities may head lower for awhile. Buying small amounts of gold and silver on a consistent monthly or quarterly basis may prove rewarding, but I wouldn't be surprised if there was a big pullback in the precious metals too.
The Liquidity Cash King Theory
Its about liquidity now, and preserving cash, and or selling short to keep or make some cash. The worst of financial problems of the world are not over yet, and will take years to work out. The problems seem to be increasing in my opinion. The way I see it is the bottom line for the global economies and markets is if global unemployment rates stay high which the current situation and the forecasts look that way, and gross domestic product stays down, we can easily be looking at much lower prices for many to most investment assets. That's a basic fundamental approach that can relate to the price charts. At some point there will be the buying opportunity of a lifetime, but we are not at that stage yet.
Asia and Emerging Markets Down Too
I will point out also, that Asia and the stronger emerging markets of late have been following the US and Europe markets down during the turmoil of this week. Globalization has tied global economies even more closer together rather than apart as some may suggest calling it the "decoupling effect" or "its different this time" theory. I am more bullish on Asia emerging markets long term than I am USA and Europe, but there are some problems there too with China's too hot real estate market, and Asia emerging markets can easily follow the rest of the world markets down too.
I Want To Point Out Again Don't Believe The Recovery Hype – The Worst is NOT Over
Regardless whether your a bull or a bear, I suggest not investing or trading off news or hype. Invest and trade in what you see as real, not what your being told and what you think about the markets, and always use stop-loss even if your a long term investor. I suggest investing and trading off the charts, its low-risk high-reward trade pattern setups, sentiment, psychology, fear and greed. Now this is not to say that news and fundamentals are not important. They are important, but its in the context of how and when you use them that is very important to either profit or loss on.
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