The straw that might break the camel’s back could be falling today as the market is struggling halfway through the trading session. Other markets around the world plummeted Friday as world governments and central banks seem helpless in stopping the inevitable — a global recession. I’ve mentioned all week how we look poised to test the market’s lows and we may get that in the afternoon session.
Oil continues its freefall despite a decision by OPEC to slash production by 1.5 million barrels a day for next month. Believe it or not, oil is at $63/ barrel and looks headed to the $50’s. Good news for gas.
Gold is also taking a hit, falling as low as $680/ ounce. What has once always been considered a “safe haven”, gold is now at its lowest levels since January of last year.
The Dow is still currently trading above its October 10 lows but is still down 358 points to 8332. It was a scary pre-market environment this morning as the Dow futures had dropped 550 points. That would have been a 700-900 point bomb that would have hit the market at the open. It is extremely rare that futures drop this low before the opening bell which triggered a temporary halt to slow the decline.
Usually when the market reaches these chaotic levels the New York Stock Exchange could be forced to use “circuit breakers” that could lead to temporarily shutting down trading. This hasn’t happened in over 10 years but would take effect if the Dow drops 1,100 points before 2pm.
The VIX (^VIX, 77.93, up 10.13) popped up to 90 this morning. If you haven’t read my blogs about the VIX, type in “VIX” in the search box there on the right of this webpage.
The last hour of trading is likely to be something to behold. We did well playing the market bounce at the beginning of the week and I have been preparing us for another test of the lows. I’m not sure if we get there today but it looks as though the bears are holding pocket Aces. We will have to see how this plays out but the market is setting up nicely for us to get into a big, big pot.