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Wall Street Panic: Futures locked down

Today's Financial News - Posted October 24, 2008

Wall Street circuit breakers have popped. Futures trading is halted as investors are forced to bail out. It may look like panic, but we will recover. This is the day we have been waiting for.

By Andrew Snyder

Baltimore – (TFN): This is looking like one of those days we will remember for a long, long time. As I write, the futures market for the S&P 500 and the Dow are locked. Traders were selling with so much pressure and so much tenacity, circuit breakers kicked in and shut it all down.

The kind of panic that has halted trading in Russia, Brazil and so many other tiny markets in the last month has made its way to Wall Street.

If there is any good news out of the situation, it is that oil prices are falling just as fast, even on the heels of OPEC’s widely expected 1.5-million barrel per day production cut. Right now, you can buy a barrel for under $65.

So why is Wall Street in doom-and-gloom mode this morning? It is all about earnings and hedged funds.

When Sony (NYSE:SNE) dramatically cut its earnings forecast last night, it caused a near-panic in Japan. Now, the sentiment has moved to the Street.

But it is not everyday traders like you and I that are doing the selling. No, it is those multi-billion dollar hedge funds we have been talking about for the last five years. With banks unwilling to lend, they are forced to meet margin calls. The only way they can do it is sell, sell, sell.

It will be a bad day on Wall Street, maybe even a historic day. But there is little news out there that we did not already know. The markets will find a trading floor, the capitulation everybody has been looking for will be gone, and we can start climbing our way out of this mess.

We are testing our intra-day lows on October 10. It is a normal market phenomenon that is indicative of big gains to come.

Fasten your seat belt and strap on your helmet. This is going to be a bumpy ride.


Next Article: Gold prices set for further steep declines

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Posted by Andrew Snyder · Filed Under US Stocks and Markets 

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