Thursday, August 7, 2008

OUCH! Where's That Bottom?

Remember that 330 point gain on Tuesday? Ancient history. The Dow stands just 50 points above where it closed last week after another drubbing on Thursday.

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In case you haven't gotten the memo yet, we're still in a bear market. And it's a nasty one that isn't anywhere near conclusion. That's at least 6 to 12 months away, if not more. The US economy is completely upside-down, but the massive mainstream media simply won't end its love affair with corporate slime.

Too bad. They're leading the American investing public down a particularly thorny garden path at the end of which is a wealth-devouring beast called debt. We're all in it, taking our cue from the absurd federal government, which just can't seem to get a handle on balancing its own books.

One great feature of this ridiculous market is the volatility. It offers in-and-out trading possibilities in both directions. However, it is not a good environment for those seeking solid investments. Nothing is solid anymore, because the foundation - the banks and financial firms - is built on quicksand.

Dow 11,431.43 -224.64; NASDAQ 2,355.73 -22.64; S&P 500 1,266.06 -23.13; NYSE Composite 8,338.40 -163.04

The cause for today's demise was likely more tied to overall market conditions than the ugly unemployment statistics that kicked off the session. Companies are trying to shed jobs and employees as quickly and quietly as possible, but there's no doubt that the recession that really began in the 4th quarter of 2007 is surely alive and well today.

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There is no truer sign of recession than job losses, and we've had month after month of those. So, hang on for another bottom, soon. Trading will take a seriously end-of-summer tone in the next few weeks as the earnings season just passed proved to be a huge flop and the horrors of an economy in deep decline will continue to dominate the headlines.

Thank goodness for preseason NFL games and the Olympics. At least there's something to divert our attention.

On the day, declining issues took out advancers by a 4454-1787 margin. New lows finished ahead of new highs, 216-75.

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Oil was up $1.44, to end at $120.02. The precious metals continued their descent unabated, however, with gold down $5.10, to $877.90 and silver off another 25 cents, to $16.26. Lest anyone believe this is a temporary condition for the metals and a buying situation, think again. Both will be lower 3 and 6 months out.

The conditions of the economy and market have deteriorated to very unsafe levels. A cataclysmic financial event is at hand, probably within the next two-three months, though it will be disguised as a "news" story. A bombing, scandal, war, etc.

Get ready for a plunge back below the 11,000 level on the Dow and 4-year lows on the NASDAQ, S&P and NYSE Composite.

NYSE Volume 1,283,215,000
NASDAQ Volume 2,236,182,000

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