Dow futures tumble over 400 points a day after historic selloff


At 7:16 a.m. ET (1216 GMT), Dow e-minis 1YMc1 were down 267 points, or 1.12 percent, with 184,051 contracts changing hands.

Let's acknowledge the upsetting part of this before moving on to a more calm, appropriate reaction to today's market fall, which itself followed on the heels of Friday's devilish drop of 666 points in the Dow.

The Dow recovered after briefly dropping 1,500 points, the largest intraday drop in the index's history, to break below the psychologically important level of 25,000. The DAX in Germany shed 0.8 percent.

Dear reader, if you follow Lombardi Letter closely, you have been warned several times about this.

The Dow plunged more than 660 points by the time it closed on Friday afternoon.

"Currently, we estimate that central banks own around 30 per cent of the domestic sovereign market". Focusing on the daily results will lead you astray. Hong Kong-shares of PetroChina, China Petroleum & Chemical, and CNOOC dropped at least 4.6% each. The jobless rate was unchanged at 4.1 per cent as expected. The dollar fell against the yen, but was overall holding steady.

Unemployment is at a 17-year low. The Dow dropped 22 percent in one day. The free fall accelerated on Friday after data from the US Labor Department showed stronger growth in wages than was anticipated - which could push inflation up.

Macquarie Group said it expects an about 10 percent increase in full-year profit compared to last year's record A$2.2 billion.

Investors, after all, recently got the corporate and income tax cuts they've been clamoring for.

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The S & P 500 declined by 4.1% to 2 648.94 points.

'It's time to sit back and wait because we might not have hit bottom'. It was last down 1.5 per cent.

Ben Bernanke similarly assumed the Fed chairmanship in 2006, at the end of another cycle in which housing and stock prices were greatly inflated. The stock even reached new record high on Friday, before closing slightly lower. Apple, Amazon and Aetna all reported record earnings.

As noted, earnings growth has been good. The next potential support level is at 2,720-2,740, marked by some previous consolidation. The S&P 500 would have to drop 7 percent or more to trigger a halt in trading, and it would have to drop 10 percent or more to be considered a "correction". "It was very quant, very systematic". The company also said it has acquired U.S. -based Frontier Partners and Australian equities specialist Airlie Funds Management. In short, analysts wanted more.

For four days in August 2011, the Dow alternated up and down days of 4 per cent and 5 per cent, and it tumbled as much as 6.6 per cent on August 24, 2015. That's something that is incredibly difficult to do if the economy is not reasonably healthy. And sharemarket valuations are less lofty in Australia. "You got the irrational exuberance out of the market". Economies are growing at a faster rates and profits are rising. Bond yields go down as demand, and therefore prices, go up. The European stock market indexes have lost 1.0-1.4% so far. Rates will remain on hold.

The trouble in the market began early last week, when investors focused on a number of lingering concerns. For now, it looks like a quick correction, but a little more downside and we may see some panic in the stock market.