Dow Jones Industrial Average Crashes 634 Points Today – Signalling New Recession Ahead


Dow Jones Industrial average - DJIA crash 634 points August 8 , 2011 signalling the great depression 2.0
About 6 months ago I warned a family member to move all his investment to cash or Canadian bond position, however the response I got back, was “Why should I do that, the financial stocks are doing very well now.”
I however, did not press the issue with this family member because I didn’t want to seem like a know it all, but I knew that the rise in the stock market will be followed by a sharp and violent downturn and it finally arrived.

Starting from October of last year, I started purchasing both HSD.TO and HQD.TO which are bear ETFs for S&P 500 and Nasdaq index. Basically, if the market goes down the price of the ETFs go up (inverse relationship). In the last 5 days the stock market took beating, today alone the Dow Jones Index dropped 634 points, in 5 days it went from 12724 down to 10809 a drop of 1915 points. The Nasdaq and S&P also got hit hard.

I sold my positions in HSD.TO an HQD.TO yesterday and today and made a small return, a few percent because unfortunately timing is everything and I bought too early and had to average down. But a positive return is better than nothing and now sitting on cash.

Looking at the charts though for all S&P, Nasdaq and DJIA it looks like there will be a bounce upwards then after the rise DJIA will fall to 10,000 and the Nasdaq to 2100 (based Sept.2010 lows)

next possibly governments around the world will inject liquidity into the stock market. So, my strategy this time is to wait for the bounce up, then again get into HQD.TO (Nasdaq bear ETF) before the next leg down.

I believe the Nasdaq can go as low as 1400 based on 5 year chart (April 2009).

Let’s hope my strategy pans out.

by Das Brain

Please read my Disclaimer.

Bookmark at:
StumbleUpon | Digg | Del.icio.us | Dzone | Newsvine | Spurl | Simpy | Furl | Reddit | Yahoo! MyWeb

Comments are closed.