Wednesday, November 19, 2008

Stocks Fall to New 5-Year Lows

The inevitable finally occurred on Wednesday as fearful investors pulled more money out of US stocks and dropped major indices to new lows.

Damage was widespread, with all sectors showing losses and the blue chip Dow Industrials recording one of its worst sessions on record, a blistering 427-point, panic-induced drubbing.

Dow 7,997.28 -427.47; NASDAQ 1,386.42 -96.85; S&P 500 806.58 -52.54; NYSE Composite 5,011.99 -353.67

While the CEOs of Detroit's Big Three automakers (Ford, GM and Chrysler) flew in private jets to Washington, where they begged for government assistance, the unheard small investor prayed silently for relief.

Huge companies may fall in this most wicked of all financial storms, but the real tragedies are being felt hardest by honest working men and women who are seeing years of painstaking investing and planning spill down a drain of deceit and despair as the value of stocks continues descending to points unknown.

The massive $6 trillion hole drilled into the world financial system by the subprime mortgage thievery - and then exacerbated by the same parties taking out insurance against the very loans they knew would fail - will not be repaired soon, if ever.

The day began with CPI figures for October showing a 1% decline in October and ended with more fear and doubt than ever in recent days. By shattering the lows set just weeks ago, on October 27, investors are awe struck by the sheer size of the continuing declines. Comparisons to the crash of 1929 are not exaggerated. Stocks have lost nearly half of their value in just one year's time. Nobody has been able to divine a way to stem the worsening economic conditions.

But it's not all bad news. Many people still have jobs, many of them well-paying ones. Unemployment has not yet reached 10%, though that is according to government figures. What the feds fail to take into account are the large sums of monies earned by labor which go routinely unaccounted for and the determination of the American people as a force for right and reason.

Out in the vast access of America are god people who will make the best of the situation. As all asset classes come tumbling down, some people, particularly those at the traditional bottom, will actually find themselves comparatively better off than before. Those who did not own stock and who have no savings will feel the least pain of all.

It's a new world, just 50-70% poorer and cheaper.

Market internals on the day were along the lines most often seen in major bear market corrections. Declining issues beat down advancers, 5958-639. New lows expanded to 1871 - nearly one out of every three stocks on the major exchanges. There were 22 stocks making new 52-week highs. Volume was high, yet another indication that the markets are again in the midst of a major sell-off.

NYSE Volume 1,546,734,000
NASDAQ Volume 2,424,409,750

The worst fears will be realized some time between now and late January. Two major events will collide on and around January 20. A newly-elected government will take the reigns of the nation and 4th quarter earnings reports will roll out from corporate offices to shareholders, investors, traders, brokers and analysts. The earnings reports are almost certain to be horrific. There's some hope that the newly-minted government will bring improvements. Nothing, however, is certain, as always.

Commodities mostly continued their downward trek. Oil dipped another 66 cents, to $54.10. Gold gained marginally, up $3.30, to $736.00. Silver fell 24 cents, to $9.31.

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