Anyway, today it was Merrill's turn to pony up and they did. Then the Federal Reserve Chairman testified and indicated the economy isn't that good either (more on that tomorrow). As a result, the markets had a terrible, horrible, no good, very bad day. However, I want to use some longer time frames to show what is really happening in the markets.
Above is a 10-day, 5-minute chart of the SPYs. Notice how far and hard they have fallen over the last few days. They have dropped from 141.5 to 133.25 or almost 6%. That's a lot of territory to move on. If you take a look at today's volume there was a ton of it.
The QQQQs have a similar sell-off in progress. They have moved from 48 to 45.39 or about 5.4%.
And the IWMs are clearly in a solidly established downtrend. Traders are fleeing the more speculative side of the market, and are flocking into Treasuries.
The 7-10 year Treasury ETF has increased from 87.9 to 89.70, or an increase of about 2%.
The 20+ year Treasury ETF has increased from 93.4 to 96.12 or almost 3%. This is despite the highest inflation rate in 17 years:
US inflation for all of 2007 hit the highest rate for 17 years, as surging energy and food costs pushed up prices, official data has shown.
Consumer prices rose by 4.1% for all of 2007, up sharply from a 2.5% increase in 2006, the US Labor Department said.
In other words -- safety is the buzzword right now.
