Historic Dow Drop Reveals Market May Be House of Cards
On Wednesday, the Dow tanked 832 points.
It represents the 3rd largest one-day point collapse of the Dow in history, and it doesn’t seem like we’re finished yet.
On Thursday, the Dow toppled further, closing down another 545 points.
You can see the initial carnage at the end of the chart line below:
Also note it took about 8 months for the Dow to recover from the “mini-crash” in late January of this year. (Highlighted by the red arrow crossing the chasm of both market peaks.)
And now it’s October. The weakening market could show its colors starting this Fall, crash hard, and have ripple effects lasting into next year.
History is littered with high-profile examples of this trend…
So if history is repeating itself, brace yourself. The signals may have been pointing at this very moment for the next big market correction.
Why This is Happening Now
It’s all happening right now, and it’s putting incredible stress on the market.
Experts at NBC News highlighted both rate and trade concerns:
Market strategist Ryan Nauman focused overseas when he told Reuters, “it is a perfect storm for technology right now with the tariff war with China and weaker demand for chips,” zeroing in on trade impacts there.
James Paulsen, chief investment strategist at Leuthold Group, already foresaw the market as “vulnerable” in a previous CNBC report. He adds (emphasis ours):
Big companies are feeling the impact too. FANG stocks (Facebook, Amazon, Netflix, and Google) are taking a beating according to another MarketWatch report, with Amazon dropping 6.2% Wednesday, and Netflix stock dropping 8.2%.
With the signals pointing to a market collapse present and accounted for, the only thing left is the main event. If it isn’t happening right now, it sure seems imminent.
So brace yourself.
Add Investment Stability During Times of Uncertainty
The latest rate hike was approved on September 26, with several more already priced in. With a move like this, it seems like Chairman Powell may have tunnel vision.
Yves Lamoureux, President of macroeconomic research firm Lamoureux & Co., thinks panic is setting in:
That sure looks like an uncertain market. Even if the Dow recovers from this big hit, what about next week?
Banks have run out of their safety net options they had in 2008. Quantitative Easing pulled us out of the depths of the Great Recession, but that process is running in reverse and is only just beginning to “claw back” the billions in cheap money that flooded the market.
What can the Fed do now if the market collapses? Not much.
We’re on a roller coaster ride, and we just tipped over the highest point. It’s about to get bumpy, so make sure you’re secure. Investing in assets known for their security during times of uncertainty like gold and silver can help provide you with stability.
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