And the Shock Waves have continued

Last week we continued to hear about the after shocks....and then Thursday the market made new lows.

Jobless claims, factory activity and a number of leading economic indicators showed worse then expected results. Claims for unemployment benefits jumped to a 26 year high!!

The money ran for the hills - treasury bills and money market that is, with 2 year treasury yields dipping below 1%. That is still a lot better then exposing your money to the risks this market holds.

Fannie Mae and Freddie Mac trying to figure out what to do about all these bad mortgages decided to halt foreclosures on 16,000 until Jan 19. They want to work out terms with the homeowners that they can afford. Get in line they are also busy paying off credit card debt and are in line for unemployment benefits. (Let’s see if they can finally figure out that age old question - how do you get blood from a stone???)

As far as companies go we saw a continued slew of earnings miss. Those that didn't miss seem to be decreasing their outlooks for the future. Either way the stocks were pounded. Look at Dell although sales are declining they were able to have better then expected Q3 earnings by cutting expenses. Of course once you cut to the bone and sales continue to decline earnings inevitably follow suit. Dell closed Friday under $10.

Anyone who has been sucked into entering the market for the high dividend yields can now expect these dividends to decrease. Look at KEYCORP as an example. It dropped its dividend by 67%. Be careful with this latest strategy!!

Another approach some are being sucked into is buying (supposedly) good companies at these (supposedly) cheap prices. How can you not be tempted by the likes of AIG at $1.60, FNM at $0.30 and CROX at $1.04? These are all off >90% from their highs and surely have only one way to go. Well there are a lot of companies that will end up at $0. High risk speculation at best.

As you know I have been waiting for this 4th wave to end and a resumption of the down trend. This happened Thursday with a new low made. Of course we did a nice rally Friday. Is this a sign the bottom?Personally I am not banking on it and in fact added puts this week. So far the Dow if off approx 40% from its high. When the Dow bottomed in 1932 it was off 88% from its high. I say this just to show the potential and why I refuse to pick bottoms. I think some people got excited about Obama polishing the new car, but just remember it is out of gas...

For those of you expecting a bounce Monday given the KRD I have a few picks for you to buy above Fridays high: BA, RY, SWY and UTX.

For those expecting a continued down move a couple of shorts NBL and NXY and of course the Q's DIA, SPY etc....

Be careful out there...