Dow Industrials 1982 - 2009

Technically, 7,470 in the DJIA (Dow Jones Industrial Average) is the 50% retracement level of the entire bull market that began in August 1982. The previous bear market bottom was on Oct 9, 2002 when the DOW was at 7,286. We’ve gone below that level and at 7,100, we not only cut in half the October 2007 highs of 14,198.50, but we have given back 50% of the 27 year move from the start of the big bull market of the 1980s to yesterday.
If you invested in 1982 and just bought and held securities, then you’ve lost 50% of the gains that you had for retirement during that time. And at the current level (Tuesday’s close) of 6,726.02, there is no support for a long ways.
The market still has a way to go until we reach the single digit PE ratios that usually happen at the end of a bear market. John Williams, the economists who writes the Shadow Stats newsletter, thinks that the DOW could fall another 70% from these levels. He might be right but that will probably be in the third downleg of this secular bear market

Cramer Responds to WH Press Secretary Gibbs

White House Press Secretary Robert Gibbs jumped on CNBC host Jim Cramer yesterday for his analysis of the economic situation. Later in the day Jim Cramer responded to the White House attacks:

Obama Administration has decided to spend their way out of this recession:

Cramer on Obama: ‘It’s Amateur Hour at Our Darkest Moment’

Health Care Takes A Hit

Health Care had been the best performing of the ten S&P 500 sectors year to date up until the last few days. Up until last week, Health Care was actually in overbought territory as investors sought refuge in a sector that is typically thought of as defensive in nature. As shown in the chart below, however, the sector has recently taken a big hit on news of higher pricing and new government-related plans for the industry. Just a few days ago, more than 80% of the stocks in the Health Care sector were trading above their 50-day moving averages. Currently the percentage stands at just nineteen. When government moves in, investors head for the hills.






Source:Bespoke Investment Group

US Economy Shrinks at Worst Pace in 25 Years

The U.S. economy contracted by a stunning 6.2% rate during the last quarter of 2008, the U.S. Commerce Department said Friday, as the more than year-long recession deepened to levels not seen in 25 years.

According to the government’s report, U.S. GDP contracted by a seasonally-adjusted rate of 6.2% in the fourth quarter. GDP was revised down from its first read of a decline of 3.8%, which came out last month.

The contraction of 6.2% was much worse than what economists were looking for, who expected the nation’s economy to contract by 5.4% during the quarter.

It was the worst quarterly contraction in the nation’s economy since 1982, according to the Commerce Department.

Stock Market Tanks After Obama's Anti-Capitalist Speech

The media sure loved the socialist big government speech last night by Dear Leader.
Unfortunately, the markets didn't.
Reuters reported:

"The tone was set early by disappointment President Barack Obama shed little new light about how his administration would stabilize the economy in a major speech before Congress."

It looks like another Barry Market day.
Will Obama and Democrats bust below that 7,000 ceiling? We'll see: