Stock Market Bubble Set to Pop? -- Newsmax

http://newsmax.com/showinsidecover.shtml?a=1999/9/29/123424

The largest economic expansion in the countrys history has been fueled by dramatic increases in private borrowing.

While the federal government, for the first time in decades, moves to begin paying off the national debt, Business Week reports that domestic borrowing by U.S. corporations is up 20 percent over last year.

With recent rate rises, bigger debt will cut into profits.

Worse, consumer borrowing may be falling and may undermine the credit-driven boom.

According to Federal Reserve numbers, consumer credit like credit card and auto loans have slowed from last year, dropping from a 9.7 percent rate to 4.5 percent for the last quarter.

Another bad indicator is that margin debt, money borrowed against collateral stocks, has jumped dramatically in recent months. In the second quarter of this year, margin credit for New York Stock Exchange equities increased by almost $20 billion. Consumer credit for the same period increased only $15 billion.

Some market analysts are worried that investors, heavily leveraged against their stock holdings, may be forced to sell if market prices drop to cover margin calls. A market drop could cause a stampede of margin calls, creating a second wave of selling.

-- Jack Mercer (mercerjack@usa.net), October 03, 1999

Answers

Kaaapooweey!! IMHO the bubble burst is even more certain than death and taxes. All we are doing is postponing the inevitable. It reminds me of the old Roadrunner cartoons. Remember when Wile Coyote would run over the edge of a cliff and he would start flapping his arms like mad trying to stay up in the air? But gravity always got him in the end. The higher the cliff, and the longer we stay in the air, the harder it is going to be when we slam into the ground!

-- @ (@@@.@), October 03, 1999.

Yep, it looks like "the master plan" is to try to keep the bubble afloat until January, then when it pops blame it on Y2K. Or rather, blame it on the evil "cyberterrorists" that put in malicious trap doors into those Y2K fixes.

-- King of Spain (madrid@aol.cum), October 03, 1999.

OR

Blame it on those *ALARMIST*s who urged *STOCKPILING* and started a PANIC.

y2k - the MOTHER of three day storms.

-- G (balzer@lanset.com), October 03, 1999.

Personally, while out of the market, I'd like to see it stay alive for a while--not at the current level, maybe in the 9s, which would warn some optimists off, but wouldn't throw everyone into utter suicidal despair...

-- Mara Wayne (MaraWayne@aol.com), October 03, 1999.

Most big crashes occur a Fibonacci 55 days after the last new high, which was on August 25. That brings up Tuesday October 19.

dave

-- dave (wootendave@hotmail.com), October 03, 1999.

JACK: Perhaps you already know about this site: http://www.futuresfax.com They are currently at a YELLOW alert, and they have a lot of historical comparison graphs of the DOW, e.g. 1929 vs. 1987, 1929 vs. now, They do mention the very vulnerable period of Fibonnaci 55 days after a new high in a major index(especially the DOW) needing to be confirmed by the other indexes within that frame of days. I posted here the other day that it is indeed strange that NO-ONE seems disturbed that the venerable DOW THEORY SIGNAL, which has an amazing record historically, gave a clear SELL signal when the DJIA dipped below 10,549 in SEPT. That was about 10 days ago, on SEPT 21, WHEN the DOW closed BELOW the AUGUST LOW. yet WHO NOTICED?

-- profit_of_doom (doom@helltopay.ca), October 03, 1999.

If thsi is true, this may be the crash trigger...

Ray Patten (10/3/99; 11:30:48MDT - Msg ID:15271) Possible Comex bankruptcy.

On Thursday, my commodity broker said that only market orders were allowed in the Gold options pit...no limit orders. I scaned my 38 years of commodity trading experience to try to remember a similar occurance, but I could not. I thought "These guys must be desperate." Then I looked at the numbers. As of Thursdays close, there were about 525,000 Gold calls outstanding. The floor traders or locals are the people who usually wright or sell us options. They have been getting our money for the last three years. As of September 21st, the committment of traders report said that the large traders were long only about 25,000 contracts. That means that the locals could be naked short over 400,000 calls. With an open interest of just over 200,000, where are they going to find the liquidity to get hedged. If Gold were to go up to $400 per ounce, their loss could be upwards of $4 billion. That could be enough to bring down the exchange.

I've had the idea for a long time that if Gold was ever freed, it would go straight to about $475 without a decent thechnical correction. It now looks to me like it will be there before the end of this month.

It's pay back time, but i'm not going to stay for the last tick. It may be that if the exchange closes, I may get nothing.

-- Andy (2000EOD@prodigy.net), October 03, 1999.