When the Dust Settles – NASDAQ, Dollar, Crude Oil

Sep 29, 2008: 8:01 PM CST

Today’s action was historic and will likely be remembered for some time to come.  The NASDAQ fell almost 10% – Crude Oil also fell 10%.  The Dollar Index rallied slightly through all the turmoil and the 10-Year Yield fell 5.0% today.  Let’s see all these developments on their respective daily charts.

The NASDAQ Fell 10% today – the largest one-day drop since April, 2000.

Price made new lows for 2008, and also we’re just beneath the 2,000 Index level – not seen since early 2005.  I’m showing the NASDAQ, as it was the largest percentage decliner on the day of the four major US Stock Market indexes (the Russell 2000 – which ‘only’ fell 5% today – is actually not currently making new 2008 lows).

Next, the Dollar Index actually rose on the day:

As I’d highlighted as a possibility prior, the $76 index level provided to be significant support and we’re now on a bounce move off of those levels – how long it continues is unclear, and we may be finding resistance at the 20 day EMA.

The Yield on the 10-Year Treasury Note fell today (note/bond prices rose sharply) as investors sought safety in fixed income.

There’s been a lot of volatilty in the bond/note/bill market, as seen here by the yield.  “We’re safe!  No, we’re not” mentality has contributed to the ‘back and forth’ in the fixed income markets.

Finally (and there’s so many more charts I’d love to show today), Crude Oil plunged 10% for a large move down with the sentiment of “Demand Destruction” forecasting a US and perhaps Global Recession… or worse.

Crude Oil settled beneath $100 per barrel again, which will in time should bring relief at the gas pump, freeing up needed cash for consumers.

If you’re a newer trader, your best bet is probably staying out of all markets and turning on the Simulation Mode until you get more experience/practice.  If it’s hard for the professionals, it will be even harder for you – 700 point swings in the Dow are not something any of us are totally used to so keep this in mind when committing hard-earned capital in your trading accounts.

Capital Preservation is the goal of the day until ‘the dust settles.’  While this might be a good environment for long-term investors, it’s certainly not a forgiving one for new active traders.

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