10/21/08 Mid week update on Dow and Nasdaq.

Another wild day in the stock market, this time with a 237 drop on the Dow. The Dow keeps struggling with the 9,000 level, as it closed today at 9,003.

If you are thinking the markets will hold here, you are doing wishful thinking. Here's some useful info. The Volume on the Nasdaq today and yesterday was about 2 Billion shares. This is considerably lower than it has been in the past several weeks. Volume during the volatile selloff a week or two ago was 3-4 Billion shares traded. So when the stocks go up you shouldn't believe the move up and when the stocks go down, watch volume in the last few minutes. The Volume spiked up near the close today and the selloff was strong. As the volume increased the Index declined rapidly. To me this data shows there is more of an inclination to sell off rather than go up.

I am still predicting that the Dow will go down to the 7,200-7,400 level. That would be about an 18% further decline. So be mindful and remember cash is King. On a more positive note, when we reach the 7,200-7,400 level we will not go lower. The markets from that point will start to go up. The rise up will not be sharp but rather slow. Most will be happy to get back to this 9,000 level. That means selling some stocks are still wise at this point, as you will be able to buy them back still lower.