20081015

Huge drop today, but the volume was not so impressive:



Take a look at intraday chart:



The WIG Index covered the smaller gap from yesterday. The breakout of previous intraday low (31240) generated sell signal on short-term. Also, US market seems to confirm sell signal. Medium-term and Long-term still in sell signal, but we have not made lower low yet.

US market had experienced another quick drop today (here or video from CNBC), but we are still above lowest low. Also take a look at bond market short summarization (here).

Just some of my thoughts about the market in general - there are not so many individual investors (also via mutual funds) on the market currently as the downtrend is clear or they obviously don't look at their portfolio. Also, pension funds tend to use buy&hold strategy, so they don't sell positions. That leaves us the most speculative hedge funds, which utilize leveraged future contracts to ride the market. However, current volatility demands very quick trades. And there is a catch - it's easy to reverse position with few contract as there is enough liquidity, but it's not as easy when you are managing a position of few hundreds contracts. Additionally, fund manager has to convince the customers that their funds are performing well, before the nervous customer takes back his money. That creates a pressure to make big gains and therefore to take greater risks. And bigger risk can be a deadly strategy now.

Regardless of finance crisis, the Americans seem to lend even more (here) from banks. We live in really interesting times.
Another interesting news are subpoenas sent to Fannie Mae, Freddie Mac, AIG and Lehman Brothers with demands to hand over documents, electronic records and other data (her).

As for Poland, the salaries are still increasing with two digits, averaging +10.9% annually (here).

Sources:
[http://www.marketwatch.com/news/story/us-stocks-fall-sharply-recession/story.aspx?guid={BB309F33-BE19-42DB-A237-F0D23C9543D5}]
[http://www.forbes.com/home/2008/10/14/legal-shareholder-suits-biz-wall-cx_wp_1015suits.html]
[http://seekingalpha.com/article/99940-total-bank-loans-and-leases-reach-a-new-record]
http://seekingalpha.com/article/99910-bond-markets-volatile-and-weak]
[http://www.money.pl/gielda/komentarze/artykul/pensje;wciaz;rosna;w;dwucyfrowym;tempie,232,0,377064.html?p=md (via Google Language Tools)]