Stocks Set for Wild Day

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BREAKING NEWS:

Stock index futures are limit down 550 points (6%) in pre-market activity this morning. Many widely traded firms are indicating a sharply lower open, after markets closed lower for the third straight day in Asia. The NIKKEI closed down 9.6% and Hang Seng fell 8.3%. The Dow Jones Euro Stoxx 50 is down 9% at 8:30 and the FTSE 100 is 8.0% lower.

Lost in the news is that the Dow Jones Industrials (NYSE: DIA) closed higher 172 points yesterday. However, this morning, many widely traded shares are indicating significantly lower. General Electric (NYSE: GE) is down 8.5%; Microsoft (Nasdaq: MSFT) is 7.2% lower; Citigroup (NYSE: C) is down 10%; Goldman Sachs (NYSE: GS) is down 14%.

The markets have been extremely volatile for quite some time now, so a reversal is completely possible. At the same time, leveraged trades are being forced to unwind at hedge funds and selling has been fueled by this and retail redemptions of pension plans. Fear often begets fear, so its entirely likely the market could also have a catastrophic day today. Recent Friday's, however, have offered vast trading ranges and wild swings, because value is becoming plainly apparent in stocks even as forced selling occurs. I would be looking for bargains, or sitting back for a more comfortable point to pick them up. It's time to look at your company's balance sheet before you make a panicked sale of their shares. On a day like today, I would consider buying Google (Nasdaq: GOOG), Yahoo (Nasdaq: YHOO) and stocks I've always liked that are now on sale, like VCA Antech (Nasdaq: WOOF). If I owned Microsoft (Nasdaq: MSFT), I would not be selling it. Also, gold remains interesting to me for the long and short term.

I think there's a decent chance we could see that Fed rate action this week instead of next week, as expected by many economists. However, the timing of such a maneuver would likely require some consultation with psychologist!

(Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK)



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