Market Sell-Off Will Continue, Dow Set To Fall Over 400 As Market Correction Underway

by | Dec 6, 2018 | Headline News | 16 comments

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    Thanks to lingering anxiety about the ongoing trade war and rhetoric between the United States and China, futures indicated that the Dow would open over 400 points lower this morning. Couple that with the expectation that the sell-off will continue, the economic recession could very well be in the beginning stages.

    According to Reuters, the S&P500 e-mini futures fell almost 2 percent at one point overnight and CME Group’s Chicago Mercantile Exchange had to implement a series of 10-second trading halts that helped limit the initial drop. In its sixth consecutive day of declines, the S&P closed down 2.1 percent after shedding 3 percent in Wednesday’s session. But at its session low, the benchmark fell 2.7 percent to its lowest level since early July

    Thursday’s volatile session will also see investors worried about rising interest rates a day ahead of the quarterly reporting season kickoff. On Tuesday, the Dow Jones Industrial Average shed nearly 800 points in its largest decline since October 10, according to CNBC.  The markets were closed yesterday, making expectations even grimmer.

    “People fear that it will be harder to snap back if we’re seeing a cyclical top in earnings with those two headwinds, which are not going away,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

    “We saw a rally this morning, and that ended up being a suckers’ rally. Then you had buy-the-dippers coming in here saying this was too much too fast,” said Dennis Dick, proprietary trader at Bright Trading Llc In Las Vegas. “Are we out of the woods here? I don’t think so,” he said. “You’re going to see a lot of volatility in the next week or so.

    Investors fear over a trade war, and the government’s inability to come to any conclusion is taking the brunt of the blame for the sell-off. Over the weekend, United States President Donald Trump met with Chinese President Xi Jinping to discuss ongoing trade quarrels between their two countries. While the White House has said it has worked out a cease-fire with Beijing, discrepancies in messaging haven’t assuaged market fears of uncertainty.

    “Unfortunately until we get new news the market continues to be a cauldron of concerns causing caution with investors,” said Art Hogan, B. Riley FBR’s chief market strategist. “With the combination of he said Xi said on China trade, a fear of an economic slowdown in 2019, and the slow trickle of Mueller investigation reports coming out, it is not at all surprising to see a buyer’s strike in the after hours market.”


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      1. Follow the bond yield curve inversion. The 2-5 ad 3-5 curves both inverted on the 3rd. We saw ridiculously wild swings in the curve on the 4th. The 2-10 spread dropped for most of the day, then rapidly dropped below 10 bps, to an intra-day low of 9.3 bps. Within 45 minutes, it rebounds to 11.7 bps.

        Then there’s the overnight into this morning. The 2-5 was inverted by something like 2 bps, briefly uninverted, and is once again inverted by .5 bps. The 2-10 is now reversing course and heading closer to inversion. I don’t remember the exact spread, but the 2-10 was considerably higher in the overnight than the current 12.6 bps.

        The only way this kind of action happens is when someone puts considerable effort into manipulating the bond market to delay the inevitable. Look at what happened two days ago. Once the 2-10 started racing toward 9.3 bps, the Dow sold off rapidly over 800 pts to the red. Intervention in the bond market cut that to around 560 pts to the red. Where did the Dow end the day? 800 pts to the red, right where it was when the 2-10 was 9.3 bps. Only thing intervention did was kick the big meltdown further down the road.

        Where are we this morning? Right where we left off two days ago. Dow opening over 400 pts to the red, with nothing that can be done to prevent an eventual 2-10 inversion. When that happens, look out below.

        • Why can’t that same manipulation keep recurring, after each recovery? It’s like taking blood.

      2. You guys don’t understand. There won’t be anymore “Great (or otherwise) Recessions. There won’t be any more, or even another “Great Depression.” This is it.

        • Are you saying we will have a market correction and then the good times will be back?
          Thanks for your thoughts….

        • what they’all don’t understand is that it’s all about the debt. and how SOMEDAY interest rates must get back to “normal”, so we can PAY savers for renting their money to U.S. And when that happens, it implodes our dollar, because it will be plain that money DOESN’T grow on trees. WAY too much debt. decades from now, when we have quit stealing our kid’s money/future, they will be asking, “how the hell did we last so long as a country”, when for many decades, we printed/borrowed ourselves into extinction…..add in the absolute corruption of both parties, and you get the perfect storm. it was nice knowin’ yuh, amurca.

        • the blame: Maybe so, but my stop loss (Shell oil) sold auto on the downturn. Two more left w/ high yields, Duke and Nextera w/ stop losses put on them. They haven’t lost much. Will stick with tax free’s. Yaaay!!

      3. IT needs to end and end now. It all needs to drop a solid 50% or perhaps more. EVERYTHING is completely out of control and fake and manipulated and crooked and corrupt – just like this country thanks really to the impotent, crooked, ass failure of all local, state and especially federal clown Gov’t.

      4. Wild morning! China is NOT happy since Canada helped us arrest the CFO of China’s largest telecom in Vancouver BC, while at the airport.

        Will this go hot? Welp, if the power / cell / internet goes down (at the same time) that will be a heads up that stuff went live!

        Buckle up!

      5. The Demorats just took the House back. Now people are seeing they might move ahead and take back the Senate and the White House.

        Get out while the getting is good, because if they do the USA will go to SHIT again!!!!!


      6. Heads up. 4,8 earthquake at 10 km depth (shallow). Near Mayotte. Last time this happened, about a week ago, there was a wave in the atmosphere that traveled around the world. What’s up with that?

      7. It is inevitable. The sad thing is that nothing has been done over the last 10 years to address the deficit and the ever increasing US government debt. All you hear from congress is more spending. At some point the rain has got to start falling on this little parade and, as we all know, most of the country is ill prepared.

      8. Mainspring and flywheel.

      9. Well it closed at -79 so I guess the plung protection team did their job.

        • Set to drop 400? Bwaaaahahahahaha, who cares? Call me when it drops 6000 and maybe it will be worth typing about….

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