# S&P Downgrade Expectations for Monday



## davext (Apr 11, 2010)

Hi All,

What does everything think this downgrade will do to the markets on Monday? 

Perhaps the downgrade is already priced in? 

Maybe whatever else happens over the weekend with Europe will be a bigger impact.


I'm just hoping the market doesn't go down anymore but I did scale out of some of my positions on Friday during the short rally.


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## fatcat (Nov 11, 2009)

what about europe which i think represents a much greater worry ..

germany has just said that it believes italy is too big to backstop ...

what about spain ?

american banks have fairly large exposure to european debt i believe

that worries me just as much


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## Jungle (Feb 17, 2010)

Slaughter house.


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## ddkay (Nov 20, 2010)

Some individual institutions like pension funds from other countries may choose to dump Treasuries, but all the central banks and specifically Japan and China said they would hold on for the time being, and they expressed disappointment that it came to this. I wouldn't be surprised if people bought more US Treasuries, interest rates aren't going to go up until there is a legitimate replacement and people mostly abandon the thought of preserving wealth in US debt. Like last week, I expect what happens in Europe is far more important on the inflows to the bond market and outflows from stocks/commodities.


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## Jon_Snow (May 20, 2009)

I could see the major indexes down 400 points, or ending the day in positive territory. Nothing in this market would surprise me.

The only thing I know about Monday is that my cash is staying safe in my savings account.


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## Four Pillars (Apr 5, 2009)

I think the market reaction to the downgrade will be minimal. Which will be unfortunate, because I'd love another large drop, so I can make some more purchases.

I predict the S&P500 will end up flat on the day.


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## fatcat (Nov 11, 2009)

> Some individual institutions like pension funds from other countries may choose to dump Treasuries, but all the central banks and specifically Japan and China said they would hold on for the time being, and they expressed disappointment that it came to this. I wouldn't be surprised if people bought more US Treasuries, interest rates aren't going to go up until there is a legitimate replacement and people mostly abandon the thought of preserving wealth in US debt. Like last week, I expect what happens in Europe is far more important on the inflows to the bond market and outflows from stocks/commodities.


 i wouldn't be surprised to see treasuries do fine at the expense of the equties which could tank (or maybe all the cash will move off the sidelines and bargain hunt)

the question is: where can you put your money ?

the banks are now charging to hold cash so even that won't work ...


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## Argonaut (Dec 7, 2010)

+1 Slaughterhouse.


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## Jungle (Feb 17, 2010)

The big money must have been tipped off with this downgrade. Like really this comes out 2 days after markets crash...hmmmmm


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## HaroldCrump (Jun 10, 2009)

^ yes, of course, that is a natural assumption.

The only stock market open during the weekend was the Saudi one and it crashed > 5% this morning (our time).
Starting from around 8:30 pm tomorrow we will start seeing the effect (if any) on the far east markets.


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## liquidfinance (Jan 28, 2011)

I think on Monday the markets will look like the have had a tornado rip through them.

There is no good news coming from anywhere and now the downgrade.


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## jamesbe (May 8, 2010)

So buy on Tuesday?


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## Belguy (May 24, 2010)

No cash!!!


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## Abha (Jun 26, 2011)

http://www.theglobeandmail.com/glob...downgrade-fingers-point-at-sp/article2121898/

I find this too funny. In any case, I re-affirm my stance that the downgrade is a non-event. 

Here's an article stating Warren Buffet's stance for those of you panicking right now. 

http://www.bloomberg.com/news/2011-...aken-still-doesn-t-see-another-recession.html


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## KaeJS (Sep 28, 2010)

Jungle said:


> Slaughter house.





Argonaut said:


> +1 Slaughterhouse.


Slaughterhouse.

And lets hope so. I've got 250 TZA and 200 CGL that I'm holding.


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## Argonaut (Dec 7, 2010)

That was a crazy bet with TZA. You certainly out-swashbuckled me. You should praise the ground that S&P walks on because they probably saved your portfolio. If I were you I would cash out when the time is right on Monday. You never know what could leak out of the Fed meeting. Gold is a hold though. After that, bearish bets are probably still pretty good for a while. Just use put options instead, you're almost giving me a sympathy heart attack with those x3 ETFs.


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## KaeJS (Sep 28, 2010)

Argonaut said:


> That was a crazy bet with TZA. You certainly out-swashbuckled me. You should praise the ground that S&P walks on because they probably saved your portfolio. If I were you I would cash out when the time is right on Monday. You never know what could leak out of the Fed meeting. Gold is a hold though. After that, bearish bets are probably still pretty good for a while. Just use put options instead, you're almost giving me a sympathy heart attack with those x3 ETFs.


Can't do options. Haven't signed the form and all that jazz to allow myself to touch options in my trading account. I really should, I just feel like I need a bit more time in the market before I start piddling around with options. Sooner or later I will get around to opening my options trading, thouh.


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## MikeT (Feb 16, 2010)

I am getting ready to go on a shopping spree. I transferred some cash into my trading account last week and sent some more in today.

You have to remember earnings were great recently! The government debt is a problem yes, but the companies themselves are basically fine right now. There are going to be alot of stocks up for sale this week with good earnings and dividend yields that just got bigger thanks to this sale.

Good companies with little to no debt and great resiliency to recessions are going to get caught up in the slaughter so those are my targets. I'll probably hold up in some triple bear etf's until we see a day or two of stabilizing prices, but really this is exactly the time to get your money out and get prepared to buy on the cheap.


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## Dmoney (Apr 28, 2011)

I think the market will suffer, unjustly so. It really is a non-event, everyone knew the U.S. economy and debt situation was precarious, the real event was the increase to the debt ceiling. This is the same S&P that rated mortgage backed securities AAA. 

The U.S. can inflate its way out of debt, which won't do the economy a whole lot of good, but individual companies will adapt, and eventually their share prices will recover.

http://www.bloomberg.com/news/2011-08-05/strategists-stick-with-17-s-p-500-rally-on-earnings.html

The level some great companies are trading at is insane. Earnings have been fairly impressive, while stock prices have crashed. I just can't get paid fast enough to jump in .


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## marina628 (Dec 14, 2010)

I hope the sun is shining Monday so I can be far away from my computer ,I want to hear about it after the fact .If I lived near Carverman I would be drinking his good german beer ,this will be like a car crash you know it is horrible but you can't help watching.


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## HaroldCrump (Jun 10, 2009)

marina628 said:


> If I lived near Carverman I would be drinking his good german beer


Given how the markets are performing, he might simply serve you some of that $7 / bottle California white wine he drinks...what's the name...ah, yes, Foxhorn


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## Belguy (May 24, 2010)

I wouldn't bet the farm on a big market drop tomorrow.


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## fatcat (Nov 11, 2009)

> I wouldn't bet the farm on a big market drop tomorrow.


has there ever been a day, so well anticipated in advance, where a large and deep selloff was predicted ? ... 

so many people are talking about it around the world, it makes you wonder if just the talk could skew whatever fundamentals are in place ... 

anything could happen ... 

maybe it will end flat, that would be the worst ... people want direction so badly right now


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## KaeJS (Sep 28, 2010)

fatcat said:


> has there ever been a day, so well anticipated in advance, where a large and deep selloff was predicted ? ...
> 
> so many people are talking about it around the world, it makes you wonder if just the talk could skew whatever fundamentals are in place ...


This happens a lot already, IMO. The market gets skewed easily.

And I agree - a flat day would really screw with peoples heads. I think most people expect a drop.


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## Eder (Feb 16, 2011)

There is so much fear that, in spite of generally stellar earnings, stocks are beaten down. I'm pretty sure the USA downgrade, whether relevant or not, will help trim 3-4% Monday.


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## Argonaut (Dec 7, 2010)

Right now we're in sell the rumour, sell the news territory.


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## fatcat (Nov 11, 2009)

great article in the new york times: *Pressing All the Buttons for a Panic Attack* talks about the nueroscience of investing

my takeaway from the article is that people are no longer investing based on the fundamentals ... with such a proliferation of data and an avalanche of information, people are investing based on what they think other people are going to do .. that is making for a freaky ride

http://www.nytimes.com/2011/08/07/business/neurofinance-shows-how-investors-can-shun-reason.html?hp


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## KaeJS (Sep 28, 2010)

fatcat said:


> my takeaway from the article is that people are no longer investing based on the fundamentals ... with such a proliferation of data and an avalanche of information, people are investing based on what they think other people are going to do .. that is making for a freaky ride


That's what I do, for the most part. Although, I do keep the fundamentals in the back of my mind.


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## fatcat (Nov 11, 2009)

Nouriel Roubini is sounding very dark in this financial times opinion piece: *Mission impossible: stop another recession*
(you need to google it to get free access from the google link)
i suspect this piece will have a big effect on psyches for tomorrow ... stoke the selloff


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## Abha (Jun 26, 2011)

fatcat said:


> Nouriel Roubini is sounding very dark in this financial times opinion piece: *Mission impossible: stop another recession*
> (you need to google it to get free access from the google link)
> i suspect this piece will have a big effect on psyches for tomorrow ... stoke the selloff


Dr. Roubini makes David Rosenberg look like a perma bull.

Nothing new with regards to his stance that the World is falling apart.


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## NorthernRaven (Aug 4, 2010)

fatcat said:


> Nouriel Roubini is sounding very dark in this financial times opinion piece: *Mission impossible: stop another recession*
> (you need to google it to get free access from the google link)


A link to the Google search.


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## OptsyEagle (Nov 29, 2009)

I can't say what other investors will do but I know the downgrade means almost nothing to me. I say almost because a small positive that may come out of this ( a big positive if we do get a big nasty drop in the stock market) is that it may force these politicians to finally address the issue.

As for the market, I can't imagine the S&P organization knowing anything more then what is already public knowledge. Now, within all that public knowledge investors seemed quite happy with receiving 2.56% interest and a promise to get their money back from the US government for a 10 year bond (how much will the US owe 10 years from now?). Keep in mind, whatever the US owes, they can print so the risk of default is actually close to zero.

Anyway, I can't see investors selling US bonds en masse or any other callamity, but as I said above, I can't speak for all investors.


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## fatcat (Nov 11, 2009)

> Dr. Roubini makes David Rosenberg look like a perma bull.
> 
> Nothing new with regards to his stance that the World is falling apart.


 agree ... i was mainly thinking about the positioning of this opinion piece, prominent in one of the most well read and respected financial papers in the world only a few hours before markets open ... sort of along the line of it being the last thing people remember before markets go live ... but agree though, he is a well known bear


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## Yudansha (May 14, 2011)

You have to remember all those who are trading in the market, are competitors. Being competitors we are always trying to out smart the other investors, so when an event like a Credit Downgrade to the wealthiest nation on earth happens, the smart money I believe is already a few steps ahead. 

In this case I think were going to see a sharp irrational sell off, as panic buttons are pressed once again. Only to see money rush in and rally this next week. 

But who knows. Investor psychology is just so dang interesting. And I'm probably wrong.


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## ddkay (Nov 20, 2010)

With Europe doing QE, expect the dollar to rise


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## humble_pie (Jun 7, 2009)

nikkei 225 down 1.52% at 9159

dow improving; now -241


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## davext (Apr 11, 2010)

Usually at night, I can't help but look at the pre-markets prior to going to bed. It's been pretty worrisome these days.

We're down 184 on the DOW now, up from the lows. Hopefully it'll get even better by the time I wake up at 8:30. 

Then when I see it down 100, I hope that i'll be close to even by 9:30. 

My wishful thinking...


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## OptsyEagle (Nov 29, 2009)

Unfortuneately the markets must trade down a reasonable amount for most of the day and hopefully all week. If they do not, they send a horrible message to the politicians that nobody really cares about these government debts. As you know, a message like that will only make the problem worse. 

If you want to have anything worth anything, in the future, you should be hoping for a nasty terrible message to be sent to Washington, today. 

Unfortuneately, I doubt we will get one since the S&P news is really no news at all.


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## dogcom (May 23, 2009)

Futures are up this morning, it could be a trap. Usually these selloffs end with a huge volume turn around or a capitulation if you will. The big guys may not be finished putting the screws down before they buy the climax with the huge volume they need.


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## andrewf (Mar 1, 2010)

*It's a trap!*


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## OptsyEagle (Nov 29, 2009)

OptsyEagle said:


> Unfortuneately the markets must trade down a reasonable amount for most of the day and hopefully all week. If they do not, they send a horrible message to the politicians that nobody really cares about these government debts. As you know, a message like that will only make the problem worse.
> 
> If you want to have anything worth anything, in the future, you should be hoping for a nasty terrible message to be sent to Washington, today.
> 
> Unfortuneately, I doubt we will get one since the S&P news is really no news at all.


That worked out very well. A really nasty sell off on Monday sending the best message possible to Washington (even got Obama out to make a press conference on their debt) and then most of it made back by today.

If I could have ordered up a scenerio myself, I couldn't have done it any better.


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## dogcom (May 23, 2009)

Well it looks like the trap was set and then the volume reversal happened all in the same day. It looks like the rally is here so load up until it fails probably in September unless QE3 arrives or something concrete gets done. Turnaround Tuesday is alive and well unless this is another trap to catch us smart guys.


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## daddybigbucks (Jan 30, 2011)

dogcom said:


> Well it looks like the trap was set and then the volume reversal happened all in the same day. It looks like the rally is here so load up until it fails probably in September unless QE3 arrives or something concrete gets done. Turnaround Tuesday is alive and well unless this is another trap to catch us smart guys.


im not convinced yet.
I think we still got some downward winds coming.


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## sensfan15 (Jul 13, 2011)

"it's a trap"


the star wars pic was so funny


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