Stock Market Update -Oct 12th

Last week I said we could be in for a rough October, but I didn't expect the worst week in the history of the stock market! They sold everything last week, not just in the US, but worldwide. Bank stocks fell again. Iceland even got caught up in the web and is now on the verge of bankruptcy. Global leaders are meeting this weekend to try and come up with solutions. Interest rates were cut worldwide in the middle of the week, but it seems like hardly anyone noticed. The Fed announced that they would backstop the commercial paper market too, an unprecedented move -but that didn't seem to make much difference either. Meanwhile Oil prices continue to fall (closing at around $80 per barrel), Gold dropped $65 on Friday, and the US Dollar continues to rise. A week earlier, the commodities index had its worst weekly decline in history. The debt clock stands at $10.290 trillion this week.

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Among the list of troubled companies, GM closed at $4.89 on Friday, while Ford closed at $1.99 per share. I've been posting information on the deteriorating situation at GM since early in the year when the stock was trading at around $26, after falling from around $40 a few months earlier (Feb 16th they posted a loss of $38 billion). Another example of how investors always have opportunities to exit losing positions before those losses get even bigger. Psychologically it's a very difficult thing to do, but it's the smart thing to do. (remember Fannie, Freddie, Bear Stearns, Lehman, Merrill Lynch, Morgan Stanley, AIG, WaMu, Wachovia, etc. -also Apple, Google, RIMM, POT, FXI (China), EWZ (Brazil), RSX (Russia), FSLR, DRYS -all examples of high fliers earlier this year which have now dropped significantly, or have gone out of business).

Next week we get the CPI report, along with a slew of earnings reports from major companies (like JNJ, KO, INTC, GOOG, IBM), as well as some of the big financial companies (C, JPM, MER, WFC). The Bond markets are closed on Monday for Columbus day.

I believe the market is close to a turning point here after the massive 22% selloff in the past two weeks, on top of another 20% loss over the past year. Keep in mind though that markets like China and Brazil have already lost about 60% in the past year, and that our markets could also fall further.

Stocks end worst week mixed after wild session
Wall Street's 8 brutal days
The Sky Falls on Wall Street
Fed to start buying commercial paper
U.S. Treasury Considers Buying Stakes in Banks
Housing Pain Gauge: Nearly 1 in 6 Owners 'Under Water'
Insurance on Lehman Debt Is the Industry’s Next Test
Bank of America profits plunge 68%
Why GE's in trouble

The Stunning Collapse of Iceland
Britain's bank bailout worth hundreds of billions
Russian markets go into free-fall, trading halted
Moscow to pump $37bn into biggest state institutions
Indonesian stock exchange remains closed
Brazil currency, stocks sink, halting trade twice
America's No. 1 Export: Debt
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.