Plummeting Stock Markets

United States Stock Market

The US Stock trade has looked grim so far in 2008.  At the 6-month point in June, major indexes are struggling.   By the end of June, the Dow Jones Industry has fallen to its lowest since the Depression.   By the end of 2007, it had dropped close to 20%, and so far this year it has fallen another 10%.  There seems to be several negative systems that are dropping the prices of stock. The last Thursday and Friday in June was the largest sale of stocks and brought the DOW to a new low.  

Bear and Bull Markets

Economists define a 10% price decline of stock in need of what they describe as an official correction.  If stock falls 20% the experts call it a firm bear market signal.  This means a substantial decline from top to bottom. The bear and bull mythology came from how the animals attack.  Bulls use their horns to force upward, and bears use their claws to slice downward.  Bulls by stock with the expectation that it will rise.  The bear market term came from fur traders who were selling skins they did not own or from bears that had yet to be caught.  They were termed “bear skin jobbers”.  This term came to describe short sellars who sold shares they did not own and only when the price lowered did they deliver the shares.  Both bear and bull markets occur inevitably. In a bear market, traders must recognize the signs early and move their assests or ride it out.  They usually do not last long.  Bear marketers are urged not to panic and sell too low.  The bull (bullies) marketers are prospering.  Some get bigheaded about their wealth and forget to invest smartly.  Marketers sometime have difficulty straddling the two markets.  Stock crashes end bull markets and bear markets can rally if only for a short time.  A market correction differs from a bear market.  It is shorter and of less size.  When trends change experts debate on weather it is a correction-rally or a new bull/bear market.  Essentially, the US is in a bear market in need of correction.  Many marketers however, are looking at overseas for buying options.

World Stock Trade

The overall world indexes are still trading over their 2008 lows, but their markets are also is crises.   In fact, most other indexes are below weekly trends long-term.   Researchers found one ETF that has not crumbled.  This market is in the critical decision mode. The iShares MCSI Emerging Markets Fund (AMEX:EEM), has climbed 400% in the last five years.  Even this company shares the pressure and burden of falling indexes.  AMEX:EEMs major stockholders are from Brazil, China, India, South Africa, South Korea, Russia, Taiwan, and Mexico.  This diverse group makes up 80% of all its funds.  Each country provides no more than 15 percent.  Here we see the clash of the Bearish and the Bullish Angles.  The Bearish Angle would close below the $133 trend and start selling more in attempts at worldwide correction.   Those with the Bullish Angle would resist closing at $140.  If EEM maintains its trend above $140 it will be a good buyer’s opportunity.