Circuit breakers for US Markets- NYSE

On October 1, 2008, the average value for the DJIA for the preceding month (September 2008) was used to calculate point levels (rounded to the nearest 50 points).
This resulted in the
Level One (10%) circuit breaker set at 1,100 points,
Level Two (20%) circuit breaker set at 2,200 points, and the
Level Three (30%) circuit breaker set at 3,350 points.

Information on SEC page

Pictorial representation on NYSE page:

http://www.nyse.com/press/circuit_breakers.html

Nouriel Roubini on CNBC- Recession to last two years

Buffett Says Now Is the Time to Buy U.S. Equities

Warren Buffett said he's buying U.S. stocks and, if prices stay attractive, his personal investments, as distinct from his stake in Berkshire Hathaway Inc., will soon be wholly in American equities.

Exaggerated concern about the long-term prosperity of financially secure U.S. companies is foolish, and most probably will be setting profit records in years to come, Buffett said.

While short-term stock movements can't be foretold, the likelihood is that the market will recover before the economy or general investor sentiment rebound, and ``if you wait for the robins, spring will be over,'' he said.

Referring to the 1930s Depression, Buffett pointed out that the Dow Jones Industrial Average reached its nadir on July 8, 1932; economic conditions continued to deteriorate until Franklin D. Roosevelt became president in March 1933, and by that time the market had climbed 30 percent.

Source:Bloomberg
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If Buffett is buying it doesn't mean it is the bottom. Be careful out there. Buffett has the capacity to wait multiple years for his investments to turn positive.

US markets direction not clear

Still stuck in this channel. No need to hurry. Watch how this plays out. If it breaks above the BLUE line, go long with ULTRA-LONG ETFs. Vice-versa if it breaks down.

Nobel Laureate Krugman Sees a `Nasty' U.S. Recession

October 17 (Bloomberg) -- Princeton University Professor Paul Krugman, winner of the 2008 Nobel Prize for economics, talks with Bloomberg's Mike Schneider in New York about the U.S. economy and global financial crisis. Krugman's new book is called "The Conscience of a Liberal." (Source: Bloomberg)

Watch Video

Dollar Libor Logs First Weekly Drop

Oct. 17 (Bloomberg) -- The cost of borrowing dollars in London fell, rounding off the first weekly decline since July, after central banks around the world pumped unprecedented amounts of cash into money markets and governments backed loans.

The London interbank offered rate, or Libor, for three-month loans in dollars dropped for a fifth day, sliding 8 basis points, or 0.08 percentage point, to 4.42 percent, the British Bankers' Association said. It declined 40 basis points this week. The overnight rate for dollars slid 27 basis points to 1.67 percent, the lowest level since September 2004. Asian rates also fell.

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This comes in as a huge relief for the credit markets. The gyrations in credit markets have a profound effect on the stock market. Watch the Libor closely.
Also keep an eye of TED SPREAD $TED.

US Markets 60 min chart

S&P 500 broke above the downtrend channel. Now is this the new formation of a bull flag? Still unclear.

SPWRA earnings

SunPower (SPWRA) Achieved $0.26 GAAP net income per share, $0.60 non-GAAP

Non-GAAP estimate consensus was $0.56

Was down $0.84 premarket and now up $2.00. This is a very volatile stock.
Earnings will only add more volatility. A very good trading stock.

We Are Facing an 'Inflation Holocaust': Jim Rogers- CNBC

Markets do not trust the governments' plans to keep struggling banks alive and investors will only calm down when the companies with bad assets are allowed to go bankrupt, legendary investor Jim Rogers, CEO of Rogers Holdings, told CNBC on Friday.
"The way to solve this problem is to let people go bankrupt," Rogers said.

Click here to play video

"Then you will hit bottom and then you start over. The people who are sound will take over the assets from the people who aren't sound and we will start over. This is the way the world has worked for a few thousand years."

The current rescue plans, which will force governments to issue more debt, print money and flood the markets with liquidity, will flare up inflation after the crisis is over and will create worse problems, Rogers warned.

"We're setting the stage for when we come out of this of a massive inflation holocaust," he said.

"I have an enormous amount of cash and I've been using it to buy more Japanese yen, more Swiss Francs, more agricultural products… there's a liquidation phase going on, where everything is being liquidated. They're selling everything in sight."

"In a period like this the way you make money coming out of it is to own the things were the fundamentals have not been impaired," Rogers added.

Source: CNBC

S&P 500 chart- US markets bottom yet ?

If you followed this chart, you would have been out of the market on September 30 and avoided the massive damage that took place in the past week.
Here in the link that I posted on Sept 30 and the chart.
We were at 1164 on Sept 30. And today we went as low as 839 marking the most historic drop ever. I didn't expect such a massive drop but if a trendline break happens and you need to sell and you could have avoided this historic drop !!


Here is current chart of S&P 500.



60 minute view of S&P 500 chart. Very important chart !!

You want the market to break out of this small 60 min channel to consider any meaningful rally or bottom calling. Otherwise, we will still remain in danger zone.
Be very careful and watch action closely to see if the trendline breaks. If trendline doesn't break put money in Inverse ETFs such as SDS as we will go back to lower levels. If the trendline breaks, put money ultra-long ETFs like SSO and DDM.
Good Luck !!

Mutual Fund outflows surge

US investors pulled record amounts of money from mutual funds last month - nearly trebling the previous mark set during September 2001 - as they rushed to cash amid market turmoil.

By the close of business on Monday, investors had withdrawn $74.5bn during September, including $50.5bn from equity mutual funds and $24bn from bond funds, according to TrimTabs. In the eight months to the end of August, the funds had attracted total net inflows of $20bn.

Big outflows were under way before Monday's stock market meltdown. On Monday alone, however, investors pulled close to $10bn from equity funds.

Money market funds, which have traditionally been a beneficiary of mutual fund outflows, saw net outflows of $10bn on Monday, indicating that investors remain extremely jittery.

Source:Financial Times

MOS earnings- misses forecast

Net income increased to $1.18 billion equating to $2.65 per share
Revenue increased to $4.32 billion.
Analysts expected earnings of 2.94 per share

"Momentum has slowed in the phosphates business near-term due to the combined effects of soft seasonal demand, higher customer inventory levels and falling raw material costs," said Prokopanko.

"We might not have to cut back a million tonnes, but we will do whatever is necessary to balance the (inventory) pipeline."

First time miss. This will be very bad for the stock.Stock is down $12 or 17% in AH.
Other stocks in this sector will be dragged down viz. POT, IPI, CF

Senate approves bailout but US futures drop; Dollar rallies

The dollar rose against the euro, approaching a one-year high, after the U.S. Senate approved a $700 billion bank-rescue bill to ease a global credit crisis.

``The ability to secure funds in the money market hasn't improved in the slightest,'' said Akio Shimizu, chief manager of foreign-exchange trading in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan's largest publicly listed lender. ``This should support the dollar as banks that need the currency will simply buy it outright in the foreign-exchange market.''

Source: Bloomberg
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Everyone was expecting a rally following the Senate vote but the opposite is going on. Futures are down 90+ points; Asian markets are down while Dollar is at yearly high. So, tomorrow oil will be heading down.
I guess the markets will be in a wait and watch mode till the House passes it.