So..how bad IS the CARNAGE in markets......BAD !!!

Markets statistics are horrible......

DOW down 3,548 points......Down 24.8%

NASDAQ down 914 points..Down 31.95%

S&P 500 down 477 points..Down 30.33%

Based on history an average bear market is Down 29%.....definition of bear triggers @ 20% drop from the high.......

So ....based on historical average...we already are doing worse in NASDAQ & S&P 500...which are down record 31.95% & 30.33%.........Dow is 4% below historical norm.......

So......let us examine what caused this carnage.......

It was the financial system which abused the trust of investing climate......they were selling INFLATED papers as assets.... which was rated AAA by rating agencies......which was sold worldwide.......

So..when those asset backed securities started to come UNGLUED when real estate collapsed in US...there was NO buyer of this worthless paper........thus severely affecting banking/regulatory ratios to lend......in the process cash needed to be raised by everyone in trillions.....

To make a long & painful story of greed & exploitations...short.......Fed & worldwide Treasury officials are busy shoring UP liquidity in their banking system.......

Treasury in US will start buying these seized/frozen papers @ fair value to give much needed cash to the banks & other financial institutions...which WILL enhance their LENDING ratios and credit will FLOW better.....

September will be known as when credit availability in US FROZE.......

October will be known as when credit was EASED up.......

So...what about markets????

As usual markets overshoots on the DOWNSIDE...which was witnessed on Friday...when real solution to help the economy was sold off????

So.... who was RIGHT in predicting this carnage on wall street......

Louise Yamada accurately predicted Dow of 10,000 area which she said will HOLD.......

Carter Worth was accurate until 1,200 on S&P 500.....then predicted NO NEW LOWS......

IBD was also WRONG when they also WARMED UP around 1200 area on S&P 500 & several times earlier....

I was WRONG in my entire thesis that as long as one is NOT in financials ..things should be more than OK.....it was NOT......

Markets USUALLY looks ahead to FUTURE and starts moving UP after DISCOUNTING bad news scenarios......I think markets have discounted more than enough....

I personally LIKE to believe that we ARE @ such a JUNCTURE....where markets will SURPRISE on the UPSIDE........

Next 12 months will be much better than last 14 months.......

It is important to be positioned for an UPSIDE tape.......Being EARLY MAY not be such a bad idea...

Ensure your own COMFORT LEVEL & do your OWN due diligence when trading/investing.

BLOG does NOT give buy or sell.

Saleem