By: Kyle James | 10-12-2018 | News
Photo credit: Ene |

The Dow Takes Massive Hit, Is A Bubble About To Burst Or Is It Business As Usual?

The economy, especially the housing market, is subject to fluctuation and rises and falls with time as bubbles come and go as part of the natural process of a free market. Just last week, the Dow Jones closed at all-time highs but so far this week the major indexes $DIA, $SPY, and $QQQ have seen a sharp pullback. Taking a look at the last several months, the Dow Jones hasn't seen any 2% days since April 15th.

Most analysts consider this a good sign since an extremely volatile Dow Jones is a typical indicator of a bear market. Despite the sharp pullback in recent days, could the upward trend continue or is it possible that the latest all-time highs are the first of a double top in the Dow Jones which could lead to a bear market of a historical scale? It is difficult to predict what the market will do next, however, it is better to go invest with the overall trend instead of trying to pick the bottom and trade against the trend.

Paul Ebeling of Live Trading News said, "Look at the market action on October 3rd and 4th in the NYSE 52Wk High & Low table above (Small Red Box). Thursday the Dow Jones closed down 0.75% from its all-time high of the day before with NYSE 52Wk Highs seeing their lowest levels in a month as 52Wk Lows soared to over 400. Come Friday much of the same happened, with both days seeing an NYSE 52Wk H-L Net of more than -300. We haven’t seen a -300 NYSE 52Wk Net since last February."

Related coverage: <a href="">Trump Says ‘Fed Has Gone Crazy’ As It Raises Interest Rates And Markets Fall Worldwide</a>

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr"><a href=";ref_src=twsrc%5Etfw">#Trump</a> | <a href="">@FoxBusiness</a><a href="">@POTUS</a> on <a href=";ref_src=twsrc%5Etfw">#Fed</a> raising interest rates: &quot;It&#39;s not necessary, in my opinion. And I think I know about it better than they do, believe me.&quot; <a href=""></a> | <a href=";ref_src=twsrc%5Etfw">#MAGA</a></p>&mdash; (@trump020) <a href="">October 11, 2018</a></blockquote>

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Others have called out the Fed for raising rates too fast including President Trump who made it clear that he thinks raising rates when inflation is minimal and government data points to a strong economy is a bad move. President Trump said earlier this week, "Well, I like to see low-interest rates. The Fed is doing what it thinks is necessary but I don’t like what they’re doing because we have inflation really checked, and we have a lot of good things happening. I just don’t think it’s necessary to go as fast."

The Federal Reserve is responsible for interest rates and last raised them in September in accordance with its plans to steadily raise rights. President Trump added, "Also, very important I think, the numbers we’re producing are record-setting. I do not want to slow it down, even a little bit, especially when you don’t have the problem of inflation. And you don’t see that inflation coming back. Now, at some point, it will and you go up."

Related coverage: <a href="">Trump's Negotiation Brilliance Displayed in Successful USMCA Trade Deal</a>

No one can deny that the president's favorite indicator took a dive this week as the stock market fell 3.1% but it doesn't have anything to do with the economy. The numbers are still improving unemployment rates are at record lows, the construction businesses are booming, and overall the economy is doing very well. So despite being a sharp pullback, this drop is probably nothing more than the usual fluctuation.

Far-left analysts are already pointing to the pullbacks in the indexes as a sign of a bear market when in reality, we are still in a market where third-quarter earnings are expected to be 21.2% higher than last year, according to CFRA Research strategist Sam Stovall. Along with earnings, corporate profits are also rising and are even expected to rise 9.9% by 2019.

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Led by poor performance across tech stocks, the Dow plunged 800 points and the S&amp;P had its worst day since February. Vice President Rick Winters has the latest market analysis on <a href="">@NECN</a>. <a href=""></a> <a href=""></a></p>&mdash; Adviser Investments (@Adviser_Invest) <a href="">October 11, 2018</a></blockquote>

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Related coverage: <a href="">Brazil - Bolsonaro Wins First Round of Voting, Stocks to Watch</a>

The technology sector has taken the largest hit in the recent pullback with Amazon ($AMZN) dropping 6.2% causing the company's CEO Jeff Bezos' net worth to plunge $9 billion in a single day. Microsoft ($MSFT) also took a massive hit and closed with a 5.4% decline. Even Intel ($INTC) fell 3.7% as its fellow tech stocks pulled it down with them. Some of the other sectors such as metals have fared better which is surprising considering the trade deal with Canada and new China tariffs.

For example, Ford ($F) was hit by the metal tariffs yet survived the trade deal with Canada relatively unscathed with a less than 1.5% drop. General motors fell even less than that while the tech giants were pounded such as Apple ($APPL) which fell 4.6% and Netflix ($NFLX) which fell 8.4% making it the biggest loser of the "Big five" tech stocks so far.

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Another SELLOFF on Wall Street! <a href=";ref_src=twsrc%5Etfw">#Nasdaq</a> close to CORRECTION territory (-10% from recent highs) with <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$fb</a> <a href=";ref_src=twsrc%5Etfw">#facebook</a> <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$nflx</a> <a href=";ref_src=twsrc%5Etfw">#netflix</a> in bear markets! Covered on <a href="">@foxnews</a> <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$amzn</a> <a href=";ref_src=twsrc%5Etfw">#amazon</a> <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$aapl</a> <a href=";ref_src=twsrc%5Etfw">#Apple</a> <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$goog</a> <a href=";ref_src=twsrc%5Etfw">#Google</a> <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$mfst</a> <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$jpm</a> <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$c</a> <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$bac</a> <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$dji</a> <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$spx</a> <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$ndq</a> <a href=""></a></p>&mdash; Susan Li (@SusanLiTV) <a href="">October 11, 2018</a></blockquote>

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The bottom line is not to get too worried over a single day of trading action, you should keep a long-term view of your investments and not worry about the market too much. Just be aware of what is happening and keep an eye on it. For now it's probably safe to say our economy will continue to improve and likewise, the stock market will rise with it.

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Twitter: #Trump #Economy #Market #SPY #MAGA #DowJones #Pence #NFLX #APPL #Kanye

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Thoughts on the above story? Comment below!
2 Comment/s
Anonymous No. 39130 2018-10-12 : 02:08

Take down the Fed. It was never properly rattified anyway, why do you allow a private company and a private board to fleese america. Fed has to go, that what early america was about; fighting the banks. Look at the private debt the goverment owes to a private company. Wake up america!

Why do you pay debt to the banks that have shares in the fed? Feeding the rothschilds (that is JP Morgan) and the others, that what your doing!

Your constitution was set up to apose this system, be the light in the world like russian, and remove this corrupt system!

Anonymous No. 39154 2018-10-12 : 09:28

There will always be those that grab and run.

I do have to wonder if the Fed's Interest hikes are timed for mid-terms.

Given the number of key position holding Socialists / Anti-Capitalists still working there, that were planted by Yo-Mama's Fed appointee.

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