Dismal Start to the Week

Tuesday, February 17, 2009

The market gapped lower over 200 points, quickly traded down another 100 points and remained rangebound throughout the sesssion. Stocks closed in the red 298 points for the first trading day of the week. Wal-Mart was the lone standout posting a 3.5% gain on the back of a positive earnings surprise. All 29 other Dow stocks closed negative for the session. There does not seem to be any specific catalyst for the selling, rather continued concerns about the fate of the US banking system and ever-growing doubts about the effectiveness of the Obama administration's stimulus package. Obama signed the $787-billion bill into law today, a bill utilizing massive spending as well as tax cuts in hopes of resusitating the US economy. Japan stunned the world today reporting a larger-than-expected drop in fourth quarter GDP contracting at an annual rate of -12.7%. Japan's status as the world's second-largest economy raises more doubts about America's ability to whether the fallout from the housing bubble and ensuing credit crunch.

The market closed on the lows today hitting the 7,550 level. The buying interest at 7,700 offered no hope for the market as we sliced through the level at the start of the session. The lows at 7,449 seem to be a magnet pulling this market lower. "Stocks fall by their own weight" and we are seeing the results of this as buyers pull their bids from the market and pessimism reigns supreme.


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