Stock Market update: Stock Market Update -Oct 5th

We got the $700 billion bailout plan approved, and the DOW dropped 500 points the day it was approved! So much for the government trying to manipulate the markets. Remember, on Monday the DOW dropped 777 points when the plan was first rejected, and all the media talking heads and all the financial 'experts' and our elected officials then got on television and insisted that we must have this plan in order to save the markets (incidentally, the amount went from $700b to $850b as the politicians added their own goodies to it). The media reports that the politicians heard from their constituents 9:1 against supporting the bailout, but the politicians voted for it anyway -so much for representation. Now the 'experts' are saying we need an interest rate cut.

Also of note this week, the national debt crossed the whopping $10 trillion level (see debt clock on the left). I've been monitoring that debt clock for several years and I've never seen it change at such a high rate. Keep your eye on this future crisis.

It seems like everything is being sold off, not just the financial companies (the short selling 'ban' was extended for another week). Even some of the mighty tech stocks like Apple, Google, RIMM, and IBM are being sold. Even commodities -look at the chart below (crude oil closed below $100 again). Adding to the bad news was a huge drop in jobs as reported on Friday -that makes it 9 months in a row for job losses. I'd stay out of the way as this bear market continues its course.

(click to enlarge)

Next week we can expect more volatility as the new earnings reporting season begins. I don't expect we will be getting much good news here, so we could be in for a rough October.

If you are not protecting or hedging your portfolio, you have probably lost over 25% in the past year. If you believe in the 'buy & hold' and 'long term' nonsense that the so-called experts preach, you haven't made a dime in the markets in the past 10 years (chart below). Zero return in 10 years -I don't call that investing. The same 'experts' say you cant time the markets, but in fact it's very easy to look at a long term chart to see when the long term trend changes direction. It changed late last year.