Markets Look to Stop Bleeding after Coordinated Global Rate Cuts

Today, major central banks around the world joined together to slash interest rates to assist global credit markets and provide yet another support for the troubled financial and credit markets.

It took a while for the markets to digest this coordinated move by major central banks and sent major market indexes on a wild ride throughout the day but most moved into positive territory as the day progressed only to get slammed again in the last half hour of trading. The volitility indicates
that markets are still nervous that the coordinated interest rate cuts around the world will still not be enough to contain the credit crisis, but there was some bargain hunting going on today as investors snapped up shares after five straight losing trading sessions.

The International Monetary Fund issued a gloomy forecast today. It said "The world economy was set for a major downturn with the United States and Europe either in or on the brink of recession. The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets
since the 1930s," the IMF said in its World Economic Outlook.

The Dow turned positive in the afternoon after a rollercoaster for much of the morning and it looked like stocks might end in positive territory but at the close the Dow ended the day down 189 points making Wednesday the 6th straight losing session in US markets. Earlier in the day European stocks tanked losing nearly 6 percent. Emerging markets got whacked with currencies falling and stocks tumbling to two-year lows.

Confidence has been lost and it has been difficult to rebuild. There were signs toward the end of the day that interbank lending rates might be dropping thus indicating that credit purse strings might be loosening some. But, it will be a while before the fear and nervousness is wiped from the markets.

U.S. retail sales numbers for September were not encouraging and come just days after the U.S. reported losing 159,000 jobs in September, bringing the YTD total to around 760,000.

Industry tracking firm Global Insight predicted U.S. auto sales would fall further in 2009 from this year’s depressed levels. General Motors shares reacted by falling to their lowest level since 1952.

At least oil prices moved slightly lower today on expectations that a global recession will likely reduce demand and oil prices will continue to move lower over time.

Oil prices may drop below $80 a barrel by the end of the year because of weakening demand and continue to slide next year as global demand deteriorates, the Centre for Global Energy Studies said. "It will go slowly down further because the world economy is heading for the rocks. There are clearly big problems,” CGES Deputy Executive Director Leo Drollas said today in an interview in Amsterdam. "Forget even about $70 a barrel next year if there’s a major recession.” If that happens, expect gas prices to retreat back into the $2 to $3 per gallon range in the U.S. in 2009.

Crude has plummeted 40 percent from its July record of $147.27 as the worsening global financial crises threatens to restrain economic growth and energy demand. This is one bright spot on the horizon for U.S. consumers. Once U.S. refineries are back up and running from the Hurricane IKE shuttering, gasoline prices in the U.S. are likely to drop further over the winter at a time when the economy could use a break.

The recent market bloodbath and sell-offs have nuked some $4.6 trillion of global stock market wealth in the past three weeks alone, according to market analysts. Over the last 12 months, the global equity losses total more than $12.4 trillion, of which around $7 trillion is from the United States.

But when things look their bleakest is typically the time to buy. I’d say that things look pretty bleak so now would likely be a great time to load up on quality stocks that have been bitch slapped to abnormally low levels during this serious market correction.

Here are some S&P 500 Stocks that are likely now in over-sold territory and might be ripe for picking. We are not saying that we are at a bottom. I know better than to predict market bottoms but over the long term picking up stocks at current levels is probably going to be a good thing as there are many values out there.

Stocks we like right now:

AAPL – Apple Computer – Some pundits say that the iPod and iPhone markets are becoming saturated and that the computer industry is in for some lean times in the next year. But Apple is not going away and at some point we think this stock is going to be very cheap. Not sure if we are there yet, but this stock was at $160 in mid-July and now is sitting at $89. I think we are close to a bottom on this one and that it is oversold at this point.

PCLN – Priceline.com - Company has been reporting fantastic quarters and has been consistently beating expectations. Will any future slowdown justify the bashing it has taken?

GOOG – Google, Inc. – It’s 52 week high is $747 and it now sits at $338. They are the main game in town as far as internet advertising and search goes. Probably oversold right now depending on how far the overall market sinks.

We are not saying these companies have bottomed out yet, but we feel that when it appears that a floor is forming in the market these stocks are likely to lead the charge off the bottom when that occurs.

We will see what tomorrow brings. For sure not any dull moments in this market!