Dow plunges 444 to multi year lows

Stocks waffled in the first half of the session, but bears came on strong in the 2nd half taking the Dow down 444, decliners were over advancers 10-1 while NAZ plunged 70. S&P 500 is down to 752, what looks like an 11 year low. Other indices I follow sold off in similar fashion.

Amidst the carnage on Wall Street, oil continues in its bear market, crashing thru the 50 barrier with ease:

CLZ08.NYM

..Crude Oil Dec 08

....48.90

... 4.72 .......(8.8%)

The interest rate on the 90 day Treasury bill has fallen to 2 basis points. Translated, that means the interest discount on it is essentially zero because of all the buyers. The 10 year Treasury bond yields 3.13%. Frightened investors are buying Treasury paper taking their yields to record lows for our times.

Congress will not be helping the autos makers until next month, supporters of aid tried to work out a compromise for help which failed. Next month auto makers will get one more chance to beg for money. Unfortunately for them, while this drama drags on their sales have to be plunging which could be sealing their fate.

The short term outlook for the markets is bleak as buyers have gone on strike. Dow is flirting with the lows set in 2002. If those do not hold, I just don't know. A few months ago, some technical guys had been talking about 11.7K being an important line to hold. Whatever they were thinking, they were proven right:


Dow Jones Industrials --- 10 years




The damage in the last 3 months is difficult for anybody to fathom, a drop of almost 4K (i.e. 1/3) in less than 3 months:


Dow Jones Industrials --- 3 months




Speaking of damage done, MLPs (along with REITs & high yield bonds) have been punished badly. As bad as the selling was in early Oct, partially related to the demise of Lehman, the punishment is being dished out again. The index is down over 40% during the last 3 months to new multi year lows:

Alerian MLP Index --- 2 months




After hours Dell (DELL) reported earnings down from last year but beat forecasts, common theme among company reports. The stock dropped 54¢ during trading hours, but rallied 38¢ (it's now a $10 stock) after hours based on gut reactions. Their report says nothing new, times are tough for everybody including Dell.

Dell posts revenue that misses estimates, profits that beatat CNNMoney.com


The other indices got clobbered badly, no point dragging out more ugly charts. I just saw one of my junk bond funds has a yield of 30%, 2700 basis points above the Treasury yield. Sadly this selling will probably drag on thru year-end with tax loss selling, frightened investor selling, fund managers selling to meet redemptions. I will check to see if Chicken Little left any messages about "The Sky is Falling." For the time being, he may be on to something!