Fridays Big Stock Market Drop – Dow Jones Index Nearly 400 Points

by Das Brain

stock market drop

The last time I wrote about a big stock market plunge was back August 16th, I believe right before I left for vacation and the Dow Jones around that time fell almost 10 percent.

Right before I went on vacation to southern California and Las Vegas, I opened quite a few positions, that is to say I started bargain hunting amongst the wreckage of the stock market correction. When I got back from vacation 2 weeks later, and checked my trading account some of the automatic orders were filled and the results of some of those trades were the best profits I’ve made so far this year.

Now let’s get back to the drop in the Dow Jones index of nearly 400 points that happened on Friday October 19th, 2007 which is also the anniversary of the October 1987 stock market crash. However, the economic situation was different back then, so a continous downward direction will probably not be likely for 2007.

On Friday October 19th, I watched my trading screens go blood red, and the Dow Jones index number continue to drop pretty much from when the market opened all the way until closing of trade at 4pm.

dow jone index down 400 points october 19, 2007

If anyone has long positions open and had stop limit or sell stop orders if probably definitely got filled and contributed to further selling. If you didn’t have sell stop orders placed well then you better just sit tight and hope you have some cash, so when the dust settles you can scoop up some bargains or average down.

Further drop in the markets will probably continue for the week of October 22nd to 26th, so I am just gonna wait until the end of the week to see I can pick up some bargains CALL option contracts that are on my target stock list. Most likely the CALL option contracts I will buy will expire in APR 2008, to have more margin of safety. Use technical analysis and let the charts tell you which stocks on your list has reached a support level and is a good buy. If I do that and wait until the end of November or December 2007, some good trading profits can be made.

There is always opportunity in these situations, you just have to be very very selective in the stocks you buy into. Don’t get caught up in the financial media hype and doom and gloom broadcast that over exaggerates everything. The key here in situations like this is not to panic. Remaining calm and about the market decline will give your brain more clarity as to the proper steps to take to capitalize on the situation.

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One Response to “Fridays Big Stock Market Drop – Dow Jones Index Nearly 400 Points”

  1. [...] and the Dow Jones index [...]