4) 6) 7) FKLI - intraday trade, 5) FCPO - position trade

4)21.11>FKLI SHOT 3@845-BUY 3@851 = -18 (21.11)

5)21.11>FCPO SHOT 1@1399-BUY 1@1495 = -96 (24.11) *POSITION TRADE

6)21.11>FKLI LONG 6@850-SELL 6@857 = +42 (21.11)

7)21.11>FKLI LONG 6@865-SELL 6@869 = +24 (21.11)

Dow Jones Industrials Crash Analysis - Great Depression Versus Today

Article Submitted by: Sol Nasisi
The Economy

I've wondering how the performance of the Dow in 2008 compares to the drop during the Great Depression. To find out, I graphed both and set them side by side. The results are interesting...

Today, as I watched the Dow sink below 8,000, I wondered how the sell-off of the last six months compares to the sell-off during the Great Depression. The chart below shows what I found. To create it, I graphed historical data taken from the DJ Indexes website for the Dow Jones Industrial Average.

Let me explain how to read the chart.

The years 1930 and 2008 are time 0 on the x axis of the graph. I then looked at the 21 years before 1930 and 2008 to see how the markets performed before the 1930 and 2008 crashes. I also charted the 10 years after the crash in 1930, represented by the positive numbers on the X axis. The left Y axis shows the Dow's price during the early part of the 20th century and the right Y axis shows the Dow's price in more modern times. One other note on the methodology is that I used the closing price of the Dow on November 11 of each year.

As you can see by looking at the blue and pink lines, before both crashes there was a sharp run-up in the value of the Dow. But the data shows that the pre-crash bubble is much bigger now than it was prior to the Great Depression. While the Dow increased about 2.5x during the priod 21 years before the crash of 1929-1930, it increased over 6X from 1988 to 2008.

In 1929, with Black Friday, the Dow began to deflate and it hit a bottom in 1932. By that point, the Dow was down almost 75% from its peak a few years earlier. Today, the Dow has fallen about 42% from its high of 13,850. As the chart shows, if this economic downturn is not over and comes close to approaching the early severity of the Great Depression, then the Dow is not done falling. It's important to note that the largest damange to the market happened at the beginning of the Depression. While economic problems continue until the beginning of World War II, the stock market began to recover from its lows in 1936. What does that mean? It means that even if our current downturn doesn't last as long as the Depression, it could be as deep for a concentrated period of time, and during that time cause further equity losses.

I don't usually use Wikipedia as a source but I came across this entry on the Great Depression and thought it appropriate. You can decide if there are parallels to today:

The Great Depression was not a sudden total collapse. The stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30 percent below the peak of September 1929.[6] Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year. But consumers, many of whom had suffered severe losses in the stock market the previous year, cut back their expenditures by ten percent, and a severe drought ravaged the agricultural heartland of the USA beginning in the northern summer of 1930.

In early 1930, credit was ample and available at low rates, but people were reluctant to add new debt by borrowing. By May 1930, auto sales had declined to below the levels of 1928. Prices in general began to decline, but wages held steady in 1930, then began to drop in 1931. Conditions were worst in farming areas, where commodity prices plunged, and in mining and logging areas, where unemployment was high and there were few other jobs. The decline in the American economy was the factor that pulled down most other countries at first, then internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot-Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade. By late in 1930, a steady decline set in which reached bottom by March 1933.

The quote doesn't touch on the obvious parallels in the banking system. Although there haven't been as many bank failures, the magnitude of the financial failures today are enormous - Bear, Lehman, Fannie, Freddie, Wachovia, Washington Mutual, Countrywide, National Citi, AIG. I realize not all of these were failures but many of the banks listed were purchased at firesale prices to prevent a failure.

The question to ask yourself about this recession is whether you think it's like the relatively mild downturns of 2001-2002, and 1991-1992 and even 1980 or is it really the worst economic downturn since the Great Depression? Because if you believe the latter, then that blue line has further to fall.

How the Mighty Have Fallen: Buffett, Other Legends Feel Bear Market Bite

Feeling mauled by the seemingly undying bear market? Take a look at the year-to-date performance for some biggest of the big-name investors and consider yourself in good company:

• Warren Buffett (Berkshire Hathaway): -43%
• Ken Hebner (CMG Focus Fund) -56%
• Harry Lange (Fidelity Magellan): -59%
• Bill Miller (Legg Mason Value Trust) -50%
• Ken Griffin (Citadel): -44%
• Carl Icahn (Icahn Enterprises): -81%
• T. Boone Pickens: Down $2 billion since July
• Kirk Kerkorian: Down $693 million on his Ford shares alone

My guest John Roque, managing director and technical analyst at Natixis Bleichroeder, suggests these staggering losses are simply a matter of the fact that "a bear market gets everyone" — even Wall Street legends.

Look no further than Warren Buffett: Shares of his Berkshire Hathaway have tumbled as his recent investment in Goldman Sachs has raised more concern about his exposure to financials than inspired confidence. The cost of credit-default swaps (CDS), or insurance against default, on Berkshire's debt has nearly tripled in two months and is wider than CDSs on many other insurance and financial firms, Bloomberg reports.

Of course, Buffett is truly a long-term investor and his defenders say it's far too soon to judge his investment in Goldman, or his much-ballyhooed "Buy American" call in October. But in a true bear market, "everybody gets taken to the cleaners," Roque says, maybe even the "Oracle of Omaha."

The Great Crash of '08 (Cont.): Dow Below 7600, S&P at 11-Year Low

Unprecedented. Historic. Ugly.

Even veteran traders were agog Thursday as the "Great Crash of 2008" added another chapter to its grisly tale.

The Dow fell 444 points, or 5.3% to 7553.56, breaching its October 2002 lows, and the Nasdaq tumbled 5.1% to 1316.

The S&P 500 fell 6.7% to 752.44, its lowest close since 1997; the index is now down 49% for the year and on track for the worst annual decline in its 80-year history, Bloomberg reports.

The Dow was actually up nearly 200 points at its high of the session, but stocks plummeted in the afternoon after:

• A speech by Treasury Secretary Paulson in which he said: "There was no playbook for responding to a once or twice in a hundred year event."
• Rumors of Congressional relief for automakers proved unfounded, although GM and Ford each closed higher.
• Layoff announcements by JPMorgan and Bank of NY Mellon.
• Citigroup tumbled anew, despite reports Saudi Prince Alwaleed will raise his stake in the bank to 5% from 4% currently.

Beyond floundering financials, basic material stocks like Foster Wheeler, Temple Inland, Mosaic and Chesapeake Energy were the big losers Thursday as commodity prices tumbled again.

In addition to more evidence of economic weakness, including the Philadelphia Fed survey and index of leading indicators, commodity producers continue to be punished by hedge fund selling. Hit by redemptions and falling market prices, assets in hedge funds shrunk by $155 billion in October alone, according to Hedge Fund Research.

Hedge funds still had about $1.56 trillion in assets as of Oct. 31, which may just mean the great unwinding still has a ways to go.

If Stocks Are So 'Cheap,' Why Are They Still Going Down?

After recovering from their initial decline, stocks were struggling midday, with the Dow threatening to violate its October low of 7882.

With the S&P and Nasdaq having failed their "retest" yesterday, the Dow is almost certain to follow suit sooner vs. later. Many market watchers believe a retest of the October 2002 closing lows of Dow 7286, S&P 777 and Nasdaq 1114 are likely before this brutal bear market ends.

"I think it's pretty reasonable to look to the '02 lows as the next support area," says John Roque, managing director and technical analyst at Natixis Bleichroeder. "But ultimately, the market will find support at a lower level than that."

Roque predicts the S&P will hit 680 and the Dow the high 6000s before this downturn is over.

As to the claim stocks are "cheap" and long-term investors should be buying, Roque has a simple response: "Have they stopped going down? If they haven't stopped going down, they're not cheap. If people have no confidence to own [stocks], they're likely to go lower."

In other words, the habitual bottom-pickers are going to get burned yet again.