2009, The Year of the Bear (so far)

We are just about to end the second month of 2009 tomorrow and February is shaping up to be even worse than January. The S&P 500 high of the year was made on the first Monday of this year and oddly enough, the low for the year was last Monday. That low almost touched the bear market low at 741.02 set last November, which represents an 11 yr low! So if the S&P drops just a little futher all buyers for the past 11 yrs are underwater. That kind of action can cause investors to panic sending stocks sharply lower. Furthermore, the measured rule target on a break of that level is a whopping 27.4% decline! If the S&P breaks that level, expect a big move. The 2008-2009 trend is down, so I'd expect it break down, and break down hard.

That's all technical, fundamentally I think there really nothing that can move the markets higher for a while. Yesterday, the treasury/PPT basically told us they have done all they can until the stress tests are done in two months(and provide unlimited funding until then). So we have to wait two months to find out if the banks are solvent!!? I guess we can just see which ones go begging for more money, so far AIG and C seem to begging the hardest (and they are the biggest bank and the biggest insurance companies in the US). Frankly, its hard to believe that those who have been so wrong about what to do thus far will get it this time.



And in today's news, Fannie Mae (FNM) is withdrawing $15.2B from the Treasury (ATM machine) after posting a $25B loss in the last quarter...

In other news, I'm looking forward to getting one of these new bearish sleeping bags. I think many would sleep much better at night knowing they are bearish. I got these images from here.


Disclosure: I own SPY puts