market

As the global markets are fighting once again with a new episode of the “subprime” crisis, the timing is obviously more than appropriate to have a look at the potential perspectives of the equity indices. With the collapse of Lehman Brothers [NYSE:LEH], the Bank of America’s [NYSE:BAC] rescue offer for Merrill Lynch [NYSE:MER] and the coming difficulties of AIG [NYSE:AIG] and other institutions, the financial crisis may be peaking and strongly argues for a new markets’ plunge.

Even Alan Greenspan claims that he has never seen a crisis like this one, and that it will take some time to overcome it.

Yesterday the Dow Jones fell by 4.42% with a closing price at 10,917.51 points. It is down 17.7% year-to-date.

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The ASX was a rash of gains yesterday. The entire market was up 3%. It was like an allergic reaction that makes you feel awesome. Bit by bit, it spread through the whole bourse. The only companies that escaped its wondrous infection were energy companies and gold firms.

We seem to be breaking out in something ourselves today. It’s not awesome. We’ve quarantined ourselves inside our bedroom.

But even from our vantage point, we can see that this is no ordinary market, reader. When people get emotional they act like a herd. And when the market is acting like a herd, everyone runs in the same direction. Check out the Wednesday stampede:

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