Weekly Market Review

The Bear is Back

by Lou Scatigna

Many were looking forward to the new year with the hope that the financial disaster of 2008 will be left behind to history and stabilization and then economic healing will arrive in 2009. So far January is turning out to be just as bad as the worst months of 2008.

This past week the stock market succumed to continued dreadful economic news. Retail sales, industrial production, corporate earnings and bank problems were all worse than expected. Some of the economic reports are boardering on depressionary.

The stock market took it on the chin this week, with large losses Monday through Wednesday while Thursday and Friday brought some stabilization. High volatility is returning and is troublesome to many market participants.

The Dow was down 3.7% for the week, SP500 down 4.5% and the tech heavy Nasdaq was down 2.7%.

Financial stocks were hit especially hard as Merrill Lynch, Bank of America and Citigroup all announced huge fourth quarter losses. For the month the Dow is down 5.48%, the SP is down 5.79% and the Nasdaq is 4.13% lower.

The January barometer is a forecasting gauge that is quite accurate. It states that as goes January so goes the entire year. Unless the market turns around over the next two weeks, 2009 can be a reprise of 2008, or maybe worse.