Will Fed Capitulation Forestall Stock Market Crash? (Video)

Will Fed Capitulation Forestall Stock Market Crash? Video – Peter Schiff

Bearish Signal –
So much for yesterday’s dead cat bounce. All of the U.S. stock market averages came plunging down today, in fact they all closed below yesterday’s lows. So even though we had those big rallies off the lows, today, we lost the entire gain and closed lower than yesterday’s low point. That is is the most bearish signal you can get.

Yesterday’s Short Covering –
Remember on yesterday’s podcast, I was not impressed with yesterday’s rally. I thought it was a typical “reversal Tuesday” rally that should be ignored. To me, it looked like a lot of short covering, particularly if you look at the type of stocks that were being bought. They seemed to me that they were the stocks that had a lot of shorts, so the shorts saw a big gap down and decided to take an opportunity to cover. But, when you have a lot of shorts who cover, that’s actually bearish, because during the next decline, they are no longer there to buy. That’s why this next decline could be particularly vicious. I don’t think the decline is finished; as I said, I think it is just getting started, unless the Federal Reserve is going to come in and change the nature of the game,


Video Source

Biggest Single NASDAQ Decline since 2008 Financial Crisis –

The Dow was down over 600 points today – 608 points. That is a percentage decline of 2.41%. Of course there were a lot of stocks that did a lot worse. Earnings today from AT&T – that stock was down just over 8%. I think there were also some worries concerning the slow growth of subscribers at DirecTV, a recent AT&T acquisition. Also, UPS, came out with disappointing earnings today. The stock was down 5.5% today. Boeing might be the only stock that was positive today, up 1.3% – a beat.

The fact that this was the biggest single day decline in Nasdaq since the 2008 financial crisis means that today’s drop is larger than any point drop that we had during the 2008 financial crisis. You have to go all the way back to the bursting of the dot com bubble. Something big is happening when you see this kind of drop. The market technically couldn’t be weaker.

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Peter Schiff

Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkeley in 1987. A financial professional for more than twenty years, he joined Euro Pacific in 1996 and served as its President until December 2010, when he became CEO. An expert on money, economic theory, and international investing, he is a highly sought after speaker at conferences and symposia around the world. He served as an economic advisor to the 2008 Ron Paul presidential campaign and ran unsuccessfully for the U.S. Senate in Connecticut in 2010.