Jun

21

 At a time like this, one hesitates to do anything but say something descriptive.

The Dax broke below 8,000 today, but came back to 8,050, and bonds were down as low as 106.04 and have now recovered slightly, to 106.13. The Dow went below 13,400, to 13,398 for an intra-day negative sequence, and yesterday set a negative reversal of one, with its close below 13,500 at 13,489. The grains are down about three percent from their recent one year highs, with corn near $4, after being at $4.20 a week ago. The open in stocks was particularly confounding, just about unchanged at 1326.7 after closing at 1327.

Almost all big moves down in the last year have been greeted with big rises the next day, with Wednesday June 6th being the exception, when there was a decline of 17 followed by a decline of 28 on the Thursday.

There was a grave decline in the afternoon yesterday, which will have all weak hands very frightened, and there must have been considerable margin selling at 10a.m. today, as the S&P and Dow hit their lows, down about half a percent on the day.

Everything in this post is completely descriptive, and not at all helpful for trading, except maybe for those who like to take out the pencil and paper and turn descriptive thoughts into predictive studies. I can however, give some perspective from a specialist in panics, who was writing for The Ticker in August 1908. The panic specialist has decided to buy only on panics, and so found himself a buying opportunity after Steel broke, circa 1895:

A slaughter has taken place during the morning. Everything from St. Paul to Coxey had broken ten, twenty, thirty, or even forty points [those were the days: shades of 1987 — Vic]. The faces about me were those of lunatics, not sane men. Standing next to me was a man who ha seen the last of his fortune swept away, and another was pacing up and down the room muttering to himself: "My God, I've lost $30,000."

The panic had come and passed so quickly that if my orders had not been entered in advance I would have stood no change of getting Steel at my figures. I bought my Steel at $25 a share, and the lowest it had touched was $24. It currently stood above $33, so yes, I had a small profit. The tree had gradually lost its branches and fallen throughout the year from its highs, but I had not yet learned how to plant the acorn to my best advantage, and worried that the new tree might never have take root [He was a cane investor through and through — Vic].

The rest of the crowd were besieging the manager, the order clerk and the the office partner with such questions as "what have I got left?", "can't you give me a report on my sales?", and "can't you carry me overnight?"

The market was rallying by then, to be sure it was rallying, but the recovery came too late to save most of them. I heard the manager explain to one unfortunate: "I'm sorry. but there was nothing else for us to do, we put the stop orders in at about three points above where your margin was exhausted. It was impossible to know in advance that there would be breaks of twenty and thirty points between sales."

At such times, we brokers stand in the gap, and all for a commission of just one eighth [a beautiful touch — Vic]. We did our best.

The specialist in panics did become a millionaire, and perhaps this will provide some descriptive perspective from one hundred years ago or more.

James Sogi comments:

Counting the kind of action, it has been over 1000 days since there has been a 30-minute bar larger than today's 12-point handle at 10 am. 


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