Thursday, March 5, 2009

Financial Crisis, 5 Mar 2009: Dow 6,594.44, -281.40 (-4.09%)

Wednesday, 4 March 2005 was an up-day in the market. The Dow Jones Industrial Average rose in intraday trading nearly to the 7,000 level. All of that was erased on 5 March, opening below 6,800, and plunging all day long in a frenetic sell-off. The Dow closed lower than 6,600, establishing a new low that hasn’t been seen since 1997.
The financial system, indeed the "civilized" world, is undergoing a massive unwinding of a multi-decade debt orgy. The process is painful and shows no signs of letting up anytime soon, even as many on Wall Street continue to try and pick the bottom, including erstwhile bears like Doug Kass and Steve Leuthold.
— Aaron Task, TechTicker,
Key companies that comprise the Dow were hammered. Citibank (C) dipped momentarily below $1 a share, closing at $1.02, with an Earnings Per Share over the past year of –3.88. It was down –9.73% on the day. General Motors (GM) closed at $1.86, with an Earnings Per Share (EPS) of –38.74, making holding onto the shares practically toxic. It plummeted –15.45%.

The technical analysis is important to listen to. There is no predictive bottom.

The Russell 2000 continues to get destroyed here… There’s clearly nothing at all to suggest anything bullish on any of these charts on any of these time frames…

Don’t get locked into any one belief. Especially when you look at every objective fact on every single one of these time frames that just continues to scream “bear market.”

There’s nothing fundamental here to suggest a turnaround. It’s, you know, it’s, it’s basically as I said, a bad bet.
– Brian Shannon,

Tonight, many are wondering where the bottom may be. 6,500? 6,000? 5,000? Even predictions of 4,000 are starting to be heard. It will be difficult, if not impossible, to predict what will happen when we hit any fathomable bottom. By then, what is certain is that the Dow Jones Industrial Average will likely need to reconsider what the top 20 “blue chip” stocks are in the modern economy. The world will likely be reeling for the better part of the next decade from the destruction of value measured in the trillions.

This is not to act as a prophet of doom or pray for the worst. The worst is happening, regardless of our collective desires. Partially because of our unsustainable collective desires of the past.

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