Dow Jones now below 7000.

[Sam Spade]

The bottom is unknown and unknowable - at least at this moment.  Mainly because we're probably not that far into the actual bear market...

Should we fall that much further below where we are right now (say 6500 or so), there is minor support at 5600, then another minor support at 4800, then major support around 3600.  In other words - a lot of air.

As I have said before, the most likely bottom in my mind, ever since we broke the October 2002 lows is now somewhere in the DOW 3-4000 range.  I said 4-5000 before, but that was before the latest downturn.  Best we can hope for now is probably the 4800 as the bottom.  Worst - I don't know - how does DOW 1500 or 2000 sound?  This would bankrupt a lot of SP companies, to put it mildly.

And this is the Bush administration's fault AND the Obama administration's fault (and Clinton too).  It's a bi-partisan thing (note who had control of Congress, etc.).  Not to mention that the ridiculous new spending, should it ever be implemented and the continual bailouts of insolvent companies, bring to a head the potential failure of our government caused by a bond market implosion.  This is a possibility, growing stronger each day in the likelihood of possible outcomes in my mind, by each action taken by the present administration.

If you want a beginning point of all this, the certainly possible target of SP500 at 210, which is around 2000 on the DOW, dates from the October 1987 crash.  Events leading up to this probably started in the mid-1980s or so...  So there.

[Sam Spade]

Good job Obama, this economy is your baby now.  You inherited a bad situation and have made it much worse with your reckless spending, lack of detail, and anti-business rhetoric. Talking down the economy isn't looking too good now is it?  You are turning a recession into a depression you asshole.

WTF are you talking about?

What you've just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.

Obama owns it now.  This is part of the reaction to his budget, the "stimulus" bill, and his actions on the bailout.  He'll own it in five months as well, and that is the real test.

I don't think he owns it in the public's mind yet.  It probably takes about 6 months from inauguration in my mind, which makes me agree with your second sentence.

[Sam Spade]

I am not going to let Republicans pin this on us.

Congrats!

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Too simplified - not just in causation, but in responsibility.  In examining the history, it seems plainly clear that both parties are as equally to blame and that de-regulation (in certain areas) is not the singular cause (it is a cause).  Lack of enforcement and over-regulation (in certain areas) is as much to blame. 

But much as in other things, I'm merely waiting to see who gets the "correct" answer first, as that is who I will support.  I just hope it doesn't occur after the *point of no return* has passed.

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The public will give him time.  I think 12-18 months is too long.  I suspect 6 months is more than likely - maybe it could be 12.  Considering the short attention span of the public and how bad things are getting (and will get), I lean towards a shorter timespan, but who knows.  One things for sure in my mind - I am willing to bet considerable money that the economy is worse in 12-18 months than now, regardless.

In terms of the financial problem, Obama is merely continuing the policies of Bush but with less clarity.  Henceforth, the market response...  IMO, Obama should have been ready with a response from day one - FDR was, he declared a bank holiday and examined everyone's books.

In some ways - it's perhaps even worse.  For example, the bailout moneys thrown at AIG today consists of a bailout of China liabilities through AIA.  Is that more payoff so China keeps buying our debt? 

In terms of government involvement, the spending plans are kinda like Bush on steroids.   They won't work either.  And even if they do work in some way (possible), it's only making the final fall worse (and if they do work it won't be for long).

Think I'm rambling now.  Will stop.

[Sam Spade]

Good job Obama, this economy is your baby now.  You inherited a bad situation and have made it much worse with your reckless spending, lack of detail, and anti-business rhetoric. Talking down the economy isn't looking too good now is it?  You are turning a recession into a depression you asshole.

WTF are you talking about?

What you've just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.

Obama owns it now.  This is part of the reaction to his budget, the "stimulus" bill, and his actions on the bailout.  He'll own it in five months as well, and that is the real test.

I don't think he owns it in the public's mind yet.  It probably takes about 6 months from inauguration in my mind, which makes me agree with your second sentence.

I think it can work, marginally, by August.  Nothing succeeds like success.  If it doesn't, you are looking at the deluge.

There certainly is the possibility out there that things *look better* by August.  If so, it's the calm before the back end of the hurricane hits.

You see, I personally think there will be some type of calm before the house of cards really collapses.  The difficult game is in telling when the *calm* will occur (i.e. we could be going through it right now, oddly enough) and when the secondary collapse begins.

For example, hindsight (and actually paying attention to economic details, which I was not at the time in any great amount) mad it clear that based off the information readily available during the start of Bear Stearns debacle and the Asian stock market crash (February 2007) that the United States was going to head towards a recession not long soon afterwards.

Personally, I myself saw that the residential housing market was ending its bubble in mid-2007 and would be contracting significantly (something which I knew would eventually happen back in 2005 - real estate is something I understand quite well).  Consequently, I planned accordingly - putting my money into cash and other safe investments and limiting my stock exposure to safer stocks because I believed a recession was at hand.

Now, I missed the last great run-up culminating in October 2007, but so what.  I didn't get killed with my investments - did ok actually. 

The problem was that, well, I couldn't sense when the recession would start.  I knew it would start, but when.  And Lord knows, I had no idea what was actually that monster under the bed.

Now, as of today - I know these events will occur, but I have no idea the magnitude they will be or when they will occur.  I can only play off of what I see in the numbers, and quite frankly, they only get worse by the day.  In that sense, we are kind of similar in our analyses. 

Maybe I'm wrong and the Greater Depression doesn't arise.  But if TPTB don't start making the correct decisions instead of making things worse, I'd like to take that bet.

[Sam Spade]

So is it like a rule now that every good day in the market needs to be followed by bad economic news making it plunge again?

Actually the good day yesterday was based on some rumor that China was going to do another stimulus.

Talk about a nothingburger (as if that would help any OR as if China has unlimited funds to stimulate things anyway).  Of course, it was denied today.

So, the markets resume the pattern.  You see - "bad" is the pattern, "good" is the interrupting of the pattern.  And will be for a while henceforth yet.

There is a bear market rally due at some point in the future, but we're not there yet.

[Sam Spade]

Someone sneezed... The market will fall another 500 points.  Oh wait, someone created a real life Krusty the Clown and it got added to the S&P 500.  Up 800.

I don't get it.  Is this something akin to saying that the markets have no rational reason for movement.

[Sam Spade]

To be fair, there were some real and substantive disastrous headlines for GM (A DJIA component) going into today.

The stock market pretty much assumes GM is bankrupt.  As well they should (since they are).

[Sam Spade]

To me, this looks like the beginning of the "major bear market rally" I referred to last week.  I thought it would take a little longer (say into April) before appearing, but you can't get everything right... 

There still is the possibility of one more down leg before the "rally" mentioned above occurs, but quite frankly, if we get higher than the close today over the next few days or don't get below 700 over the next few weeks - I would ignore that possibility.

As far as it all goes, I can see two real likely long-term targets for this "rally" over the next few months (wouldn't see it going past 6-8 months, 3-4 months is also quite likely).  One is somewhere around SP500 @ 850-900 (translates into a bit over 9000 on the DOW), the other is around SP500 @ 1000 (translates into around 10,000 on the DOW).  If we do reach SP500 @ 1000, I would sell most everything or short the phonebook (or something like that).

So, good luck and hold long for now.