The Lost Decade, American Style?

Housing prices fell as much as 18% in November 2008 when compared to the year-earlier period. Consumer confidence registered a 40-year low. Influential NYU economics professor Nouriel Roubini says unemployment will hit 9% and that the best we can hope for is 1% GDP growth in 2010.

Brother, can you spend a dime?

Caterpillar (NYSE:CAT) missed earnings expectations and announced 5,000 job cuts. Home Depot (NYSE:HD) is cutting 7,000 jobs. And Sprint (NYSE:S) plans to ax 8,000 employees. And yet stocks are up today due to a surprise jump in existing home sales for December.

Dividend cut at GE?

They say what doesn’t kill you makes you stronger. I keep that in mind as I watch the Dow Industrials repeatedly test the 8,000 support level. 
We’ve watched buyers continue to step in at the 8,000 range. That clearly makes this support level stronger. The recent sell-off at Bank of America (NYSE:BAC) failed to send the Dow below 8,000. Today, it’s GE’s (NYSE:GE) turn.
 

IBM, AAPL Beat Earnings, MSFT Misses and USO

 
Once again, the buyers have stepped in at obvious support levels and sent stocks higher. We’ve identified support for the Dow Industrials at around 8,000. And while the index traded below 8,000 this week, the fact that buyers continue to step in remains one of the few positives for stock prices.

President Obama

The news reported there were 1.4 million people on the Mall to watch Obama get sworn in. And there had to have been that many more in the city. It was nuts. We’re slowly returning to normal today. 
Despite the painfully cold weather, the crowds were energized by Obama’s speech. I wish I could say the same for the stock markets. The Dow Industrials lost 330 points to close below 8,000 for the first time in two months. Seems like just Friday I was mulling the potential for the Dow to retest those November 20 lows…

2009 Forecast

Once again, the Dow Industrials has confirmed that there is support around the 8,000 level. Yesterday’s bounce marked the 12th time the Dow has bounced as it approached 8,000 since October. Only once has it failed to do so. That was November 20, when it set the low for this bear market at 7,464.

Economic Recovery?

No, the U.S. economy is not getting better. It’s getting worse. Daily Profit has been saying that unemployment will go higher and that we will see many more bankruptcies, especially in retail. But that doesn’t mean it’s any easier to take in the bad news.

The Fed’s About Face

It’s been my contention that oil prices will remain range-bound for the foreseeable future. And the 60 Minutes story I relayed on Monday supports that belief. If oil’s move to $147 was based on more speculation (and manipulation), than it was on true supply and demand issues, then it’s going to be a while before enough demand returns to push oil prices significantly higher.

The Oil Bubble

 

60 Minutes ran an excellent piece on the run in oil prices from 2005 – 2008. And guess what? It was all Enron’s fault!

 

Stock Valuations

On Wednesday, after a few down days in a row, we tried to sift through the various clues to decide whether the selling we saw was investors taking some profits, or whether we were seeing the start of a more serious sell-off based on lowered earnings guidance and the prospect of unemployment running higher than the current consensus of 9%.