Last night was a pure aberration. A dip between the seismic...

Last night was a pure aberration.

A dip between the seismic ripples caused by the great financial earthquake that still continues.

The lack of confidence on the ASX today signals that our market simply does not believe that we are anywhere near the bottom of this.

In fact, our market imo still has more than 2,000 points to drop before any real recovery and the Dow will slip to 4,000.

Be prepared for another 3 years of the worst recession we have seen for more than 70 years.

U.S. Stock-Index Futures Decline on Slump in Housing Starts
By Eric Martin

Oct. 17 (Bloomberg) -- U.S. stock futures fell, indicating the Standard & Poor's 500 Index may trim its biggest weekly gain since 2003, after a bigger-than-forecast decrease in housing starts added to evidence the economy is in a recession.

Lennar Corp. and Toll Brothers Inc. led builders lower after the government said construction of single-family homes plunged to the lowest level in a quarter century. Northwest Airlines Corp. and U.S. Airways Group Inc. retreated more than 5 percent as oil climbed for the first time in four days.

``What we're seeing here is further evidence of the tightening of the credit market and the impact it's having on economic activity,'' said Peter Jankovskis, the Lisle, Illinois- based co-chief investment officer at Oakbrook Investments LLC, which manages $1.2 billion.

Futures on the S&P 500 expiring in December lost 11.6 points, or 1.2 percent, to 929.4 at 8:58 a.m. in New York. Futures on the Dow Jones Industrial Average dropped 118, or 1.3 percent, to 8,848. Nasdaq-100 Index futures fell 22.5, or 1.7 percent, to 1,300.5.

Europe's Dow Jones Stoxx 600 Index added 1.6 percent, while the MSCI Asia Pacific Index rose 0.4 percent.

Investors were whipsawed this week as governments injected $2 trillion to bail out banks amid growing signs the credit crisis will spur a contraction in the global economy. The S&P 500 posted its biggest gain since the 1930s on Oct. 13, before plunging the most since the crash of 1987 on Oct. 15 as retail sales had their steepest drop in three years.

The S&P 500 has climbed 5.3 percent since Oct. 10, the biggest weekly advance since March 2003, as money-market rates dropped and prospects of a government bailout of bond insurers lifted financial shares. The index is still down 36 percent in 2008 as losses and writedowns from mortgage-related investments at banks worldwide swelled to $660 billion.

Housing Slump

Lennar slumped 38 cents to $8.60 and Toll Brothers lost 23 cents to $19.10. Construction began on 817,000 houses last month, down 6.3 percent from August's 872,000 level that was lower than previously estimated, the Commerce Department said. Building permits, a sign of future construction, dropped 8.3 percent to 786,000 pace, the lowest level since November 1981.

Northwest Airlines slid 6.1 percent to $10.07 and US Air retreated 5.6 percent to $6.40. Crude oil for November delivery rose as much as 4.5 percent to $73.02 a barrel, rebounding from a 13-month low on the New York Mercantile Exchange.

Google Gains

Google Inc. rallied $31.98 to $385. The company reported third-quarter profit, excluding some items, of $4.92 a share. That beat the $4.75 average analyst estimate in a Bloomberg survey. Google said customers are still buying Web ads even as the economy slows.

Advanced Micro Devices Inc. climbed 38 cents to $4.50. The second-largest maker of personal-computer processors posted a narrower loss in the third quarter. Sales, excluding a $191 million technology license payment, rose 1.7 percent to $1.59 billion.

Honeywell International Inc. added 7 cents to $31. The world's largest maker of airplane cockpit instruments said third-quarter earnings rose 16 percent.

Schlumberger Ltd. added 80 cents to $54. The world's largest oilfield-services provider said third-quarter profit rose 13 percent after record crude prices spurred exploration and production spending by customers. Earnings per share matched the average of 25 analyst estimates for profit excluding any such items, according to a Bloomberg survey.

Yesterday's Rally

Stocks surged yesterday as oil's retreat below $70 a barrel sparked a rally in consumer companies. The index halted a two- day slump that threatened to erase almost all of the 12 percent gain in the S&P 500 on Oct. 13, when the market climbed on speculation the government's plan to shore up banks will ease the credit crisis.

The S&P 500 is valued at 11.6 times estimated profit for its companies. When that price-to-earnings ratio sank to 10.9 on Oct. 10, the index was the cheapest compared with the multiple using trailing profit since June 1985.

Warren Buffett said he's buying U.S. stocks and his personal investments may soon be wholly in American equities if prices remain attractive.

``A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when other are fearful,'' Buffett, the second-richest man in the U.S., wrote in the New York Times.

The stock market's wildest swings since 1929 may get even bigger as almost 80 million options expire today. The most widely owned S&P 500 options expiring this week are October 1,150 puts. The S&P 500's 18 percent retreat from that strike price profited buyers of those contracts, which increased almost sixfold in value this month. Even after yesterday's 4.3 percent surge, the index has slumped 22 percent in three weeks.

`Extreme Volatility'

The Chicago Board Options Exchange Volatility Index, a measure of expected share-price swings and option prices, surged to an intraday record 81.17 yesterday.

``We are seeing extreme volatility, and the market is not finding its moment,'' said Alberto Espelosin, who helps manage the equivalent of $7.7 billion at Zaragoza, Spain-based Ibercaja Gestion. ``I would expect with all the measures the government in the U.S. has taken to help indexes, in the long-term we will return to more normal levels of volatility. But that will not happen in the very short-term.''

The S&P 500 has fallen in 10 of the past 12 trading days as the earnings outlook for companies in the index deteriorated. Profits fell 33 percent on average for the 68 companies that reported third-quarter results since Oct. 7, according to Bloomberg data.

Wall Street analysts forecast a 7.5 percent drop in earnings in the third quarter in a Bloomberg survey last week. Analysts have maintained forecasts for record profits even as the seizure in credit markets caused banks to stop lending to each other, sent U.S. stocks to the worst week in 75 years and prompted unprecedented efforts to cushion global economies.