Buy On Panic

The Search For Capitulation

After seven straight days of historic declines, the US stock market may be poised to stage a reversal on Friday.

The Dow Jones Industrial Average was down nearly 700 points in the opening minutes of trading and has since recovered to a loss of just over 200.  The other major indexes are also continuing extreme volatility. 

The Dow Jones Industrial average is now down more than 21% in October.  Exactly one year after it hit its all-time high, the DJIA posted its seventh-straight loss, tumbling 678.91 points, or 7.3 percent, to close at 8,579.19 on Thursday.

Investors Seek Stock Market Capitulation

Did the US financial markets experience capitulation today?  Time will tell but a dramatic rally in the last hour of trading helped the Dow Jones Industrial Average pare an intraday decline of over 800 points to a closing loss of 370.

Worldwide equities lost roughly $2.5 trillion in market value on Monday.

On the NYSE 99% of volume was for declining tickers with only 84 stocks posting gains against 3,136 decliners.

With earnings season on Wall Street slated to kick off this week volatility can be expected to prevail as companies announce adjustments to deal with the changing financial landscape.

Chesapeake Energy Hits 22 Month Low

Shares of natural gas producer Chesapeake Energy (NYSE CHK) are currently down over 10% in Thursday's trading.  The sell-off follows a statement by the Natural Gas Supply Association Average that natural gas production this winter is expected to rise by 8% compared with last winter to its highest level in 35 years.

Traders should look for a support level at $28.05 (the low set in January 2007).