Stocks Retreat Below 1997 Levels

Good Evening All

Yuck! What else can you say about today? The DOW plunged 300 points to end the day at 6763. These levels on the DOW have not been seen since 1997. CNBC had a great stat today: Only 12 companies on the DOW are up since 1997.

How bout them apples? I thought stocks always go up? Don't stocks always come back? That's whats been driven into our heads by our financial experts on a daily basis. Millions of Americans are now down more than 50% in their 401k's as a result of the brilliant "buy and hold" strategies that were sold to them by a network of financial fools that were supposed to be professional financial advisers. I think all of these clowns need to retake their series 7 and learn what a real investment portfolio looks like!

This is why you need to plug your ears each day when you see bubblevision rolling out their slew of bottom callers every hour. The system is broken folks and the truth here is no one knows where the bottom is including myself.

Stocks run a serious risk of losing its status as THE place to invest for the long term.

I say this because this is what happens when you have a stock market that is filled with manipulation, fraud, and criminals. Investors are starting to ask themselves: Do I really want to invest my life savings into a corrupt system that's filled with a bunch of Madoffs? The answer is increasingly becoming no and until this mess is cleaned up, I think the DOW continues to fall.

What was interesting about today was there was no real catalyst that sent stocks into a tailspin. The usual quarterly AIG bailout after a $60 billion quarterly loss was about the only thing that made news today. God, I can't even count how many times this turd has been bailed out now. Whats this the third time now? Call me crazy but here is an idea: Perhaps this financial black hole needs to die?

I find it amazing that the government agrees to give a .40 stock(AIG) $30 billion dollars after already throwing them over $130 billion in the past 6 months. We need to ask ourselves: Is this company too big to fail or too big to survive? Put me in the "too big to survive" camp.

Bottom Line:

There really isn't much news to discuss here folks. The problem we have is there is zero confidence in the markets. Investors continue to be forced to sit in the dark. Our financial firms are insolvent and every investor knows it. The government still refuses to tell us how they plan on fixing it.

The DC and Wall St crew continue to "hide the sausage" from a transparency standpoint. As a result, no one knows what the rules of the game are now when it comes to investing in our capital markets. This sends investors for the hills. Until investors understand what they are buying, don't expect private money to come back into the market and buy stocks.

Transparency must return or this market is going to go down faster then a cheap hooker. I stayed mildy short into the close. I see no reason to get out of positions as long as the financial system continues to keep everyone in the dark.

We did pin and close at 700 on the S&P today. This appears to possibly be setting up as an area of possible resistance. There was a little buying after hours that ran it up to 705. This sets up an interesting day tomorrow. A bounce here is possible but I don't see it gathering any steam.

If we firmly break south through 700 tomorrow at the open, there is a good chance the next stop is 600.

Geithner and Obama had better come up with a plan or this market is in deep trouble. Its hard to believe that we have retraced all of the way back to the '97 levels.

So how ugly could this collapse get in a worse case scenario? Take a look at this chart:

How does DOW 1000 sound? Not too good I would assume. If all hell were to break loose I think DOW 1000 holds no matter how bad things get. There is major resistance at these levels. The scary thing here is when you look at that chart, there isn't really that much resistance between DOW 1000 and where we are today.

Do I think this is likely to happen? No. I am hoping that the small 1995 area of resistance holds right around DOW 4-5k. Sadly, when you look at this chart, DOW 1000 appears to have some credibility because its been a straight rocket ride up ever since and these trendlines(other than the DOW 2000 area) have never really been retested as a result.

We are in uncharted waters here folks. Anyone saying they know where the bottom is at this point should be ignored.