The recent climb for the Dow to just under the 9k mark has been surprising to say the least. If markets like to climb a wall of worry then they had quite a high one to get over of late, economic data in the past two weeks coming in worse than already poor expectations.
But last night the penny dropped, albeit in the form of disappointment over the automakers bailout. That in itself may prove to be unsuccessful even if it passes the senate eventually. The Whitehouse is now looking to use some of the bailout loot reserved for the banks instead. Either way it’s messy and the outcome will be highly uncertain at best, a waste of money from the outside at worst.
The Dow came out of it’s benign hibernation to finish down 200pts. It’s also poised for a triple digit decline today, although just how bad may be tempered by the news that retail sales came in not as bad as expected. Barring a high profile pre-Xmas bankruptcy, I’m looking to find support around 8,200 or if a bankruptcy occurs, somewhere around the mid to upper 7,000 (ie no lower low for the time being).
There’s an awful lot of money on the sidelines that needs a new direction for 2009, recession or not. As much as I hate the term ‘window dressing’, it’s very difficult to ignore basic market concepts such as this, especially seeing as the market has been showing all the signs of finding a range it is comfortable with since the end of the November carnage, at least for now. Then we can worry about what 2009 has in store.