Thursday, November 1, 2007

There is no fury like a stock market scorned

Wow! Just WOW!

Today was one of those days that as soon as I woke up and stubbed my toe, I knew it would not be a great day. Throughout the morning, bad news was coming left and right.

First it was Citigroup. Analysts from CIBC downgraded Citigroup, citing fears about continued fallout from the subprime mess caused the big C to tumble 6.58% or loss about $14 BILLION in market cap. This also prompted concerns across the entire banking sector.

Then, Exxon Mobile reported a 10% decline in profits.

Throughout the day, the market fell like a concrete airplane filled with concrete little people all hoping to get on the ground as fast as possible.

And on top of that, CVS announced a great quarter and its stock price still plummeted 1.5%.

So, what will happen tomorrow? There are really two possibilities I can think of:

(1) The market will stay in its death spiral, feeding off of today's loss and the Asian markets reactionary drop to continue falling.

(2) After one of the biggest losses in the Dow in months, bargain hunters see an excellent opportunity to buy in.

Option (2) is definitely very optimistic, but barring any good economic news, i think the chances are 70/30 for option (1).

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