Market Drops, Again

Fundamental Take:
The market gapped lower 130 points on two pieces of disappointing news. Chinese premier Wen Jiabao extinguished expectations of a second stimulus plan stating that he believes the previously announced $585 billion plan should be sufficient to meet economic growth targets of 8% this year. General Motors reported that auditors of their recent 10K filing have significant doubts about GM as a going concern. GM is currently asking for $7.7 billion more in aid from the US government. Wal-Mart was a standout in the Dow Jones gaining 2.7% after reporting a 5.1% increase in same-store sales and hiking its dividend 15%. General Electric was also spared today closing up 0.9% holding onto yesterday's snapback gains. Financials were once again a massive drag on the indexes with the sector falling over 9% today. Financial shares continue to spiral downwards as Geithner plans and plans what to do with the second half of TARP. Bespoke Investment Group said it best in their weekly newsletter this past week, "When governments come knocking, investors run out the back door." The fears of nationalization continue to deliver blows to banking stocks with no clarity coming from the administration or Treasury. The Dow closed down 281 points putting the year-to-date losses at 25% in the index.

Technical Take:
The market hit a new 12-year low today closing well into the 6,000s at 6,594. Technicals provide no hope for the market as prices dribble lower and lower. The VIX closed at 50 today, at the top end of its range for the last few months. The lack of a dramatic spike in the VIX indicates a complacency with the market's weakness. A large spike in fear is expected as the market breaks to new lows but a level of dispondency has set in. Investors seem detached, not panicking as prices fall but unwilling to hold a bid at any level. The technical landscape is bleak forecasting nothing but lower prices. The mighty bear is mauling anyone who steps into his path.