Would someone please remind folks that it’s Friday and we all deserve a relaxing weekend? I for one will be doing my usual Saturday morning Yoga. But it’s nasty out there – the contagion has spread, and panic is now the correct adjective.
The overnight Dow crash hit Asia hard – the Sensex is down at least 9 percent and looks like it’s headed for a holiday south of 10,000, the rupee has hit an all time low and in Japan the Nikkei tumbled another 10 percent. Looks like that decision to let Lehman go bust set off the mother of all chain reactions…and Indian markets may be headed back to 2006 levels.
Here’s our resident technical analyst Phil Smith:
…As the chart shows the SENSEX has broken through some very strong and very important support points in the past couple of weeks. These are clearly showed on the chart with the support at 11,900 to 12,500 being broken effortlessly. The next major support levels for this market now stand at around 9,700 as marked and coincides with the old support levels reached back in 2006 when the market staged its dramatic correction then. Currently all the technical indicators are bearish as they have been since the middle of September
Once again, all eyes are on Washington, where on Saturday President Bush (remember him?) will meet finance ministers from the world’s wealthiest countries. The IMF will be there too with emergency funds available.
But is this the time for traditional remedies? A coordinated rate cut by central banks on Monday feels like ancient history. So what’s next? The U.S. government is talking about taking large stakes in banks to ensure liquidity (meaning free marketeer President Bush may preside over the largest nationalisation of banks in history!)