Friday, February 29, 2008

Stocks Back in the Tank; Investors Throwing in the Towels

Investors didn't need any more news to tell them to sell. They should have been selling all along. Some just got the memo today that, a) the economy is faltering, b) the US dollar continues to lose value in comparison to other currencies, c) gas prices are through the roof, d) food prices are following gas prices, e) the economy is headed for a deep recession, f) the Fed rate cuts don't matter, g) corporate profits have been slowing for the past six months, etc., etc.

Why go on? The news has been nothing but bad. In fact, it's worse. The news has been horrible with mentions of worst since 1981, largest drop in two decades, and the like.

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So it should come as no surprise to anyone that stocks dropped like rocks over the past two days. We have thieves running Wall Street and imbeciles running the government.

Dow 12,266.39 -315.79; NASDAQ 2,271.48 -60.09; S&P 500 1,330.63 -37.05; NYSE Composite 8,962.46 -259.42

The decline today was not limited to any particular niche. All kinds of stocks were hit across all sectors. Declining issues beat advancers, 5206-1103, that's nearly a 5-to-1 ratio. New lows continued their dominance over new highs, 420-77, completing four straight months with new lows winning every day (except for two days in November).

There has not been a single day in 2008 in which there were more new highs than new lows. Get used to it, because things aren't going to get any better any time soon.

Oil priced a bit lower today, down a whole 71 cents to close the week at $101.84. Gold and silver hit new record highs again, at $975.00 and $19.92, respectively.

With the markets having taken another downturn, the next move should be to plumb the depths of January 22-23. The Dow closed today less than 300 points above the most recent closing low, though it is still 800 points above the intraday lows. Both could, and probably will, be tested within the next two weeks.

And by the way, did anyone see the rescue plan for Ambac Financial, the announcement of which sparked a 225-point rally on Friday? No? Really! I said previously that the announcement was bogus as is the supposed plan, along with S&P continuing to rate the company's debt at AAA. It was nothing but a sleazy, insider trick and the jig is up. The phony rally is over.

Wise words to follow: Gambling is the act of creating risk where there is none; investing is managing risk that exists. There's certainly plenty of downside risk to go around. Anybody buying now is engaging in gambling.

NYSE Volume 4,354,759,000
NASDAQ Volume 2,516,537,500

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