Dow Jones Industrial Average has broken the lowest point since Jan 2008 and have confirmed the continuation of bear trend. Nasdaq and S&P 500 is still staying above the lowest point although have broken from the bear flag.
Things are going tough for US stock markets.

According to a study of presidential approval ratings by Ned Davis Research that looks back all the way to the days of President John F. Kennedy, when the president’s approval rating is below 35%, as it is now, the Dow Jones Industrial Average Index loses an average of 5.9% per year. When times are good and presidential approval ratings exceed 65%, the Dow rises at an annualized rate of 2.6%.

Since opening this Monday, the bulls have taken flight at Dow Jones and the index is descending steadily towards March lows of 11850. As I mentioned before, if investors can or are willing to hold the fort here, we can look forward to a sustained upswing for the next week or so, barring unforeseen disasters.

Oil prices have resumed their northward climb. And inflation has returned to the American lexicon for the first time in decades. For U.S. consumers, there’s no way to dodge the financial fallout of that economic one-two punch.

Oil rises $10.75 to $138.54, jobless rates spike to 5.5%. If these are not bad news, I don’t know what is. Not surprisingly, Dow Jones came down 394.64 (or 3.1%) to close at 12,209.81, its biggest one-day decline since the subprime mortgage crisis in February 2007.

I believe The Fed is right in not lowering the interest rates in the short term. It is a painful measure but the general economy will benefit in the long term. In fact, as an investor, I want to see a government adopting tough measures to cure the economic ills.

The stock market continued its losses on Tuesday after Fannie Mae, D.R. Horton Inc. and Swiss bank UBS reported quarterly losses. We also recorded a new record for crude oil, $121.49.

Somebody is obviously wrong. You can’t have demand and prices soaring at the same time that a global recession is taking place. Our solution is to follow the money — and bet on commodities. We think the next tidal wave of wealth pouring into commodities could be a real doozy.

Consider the latest readings of the Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average recommended stock market exposure among a subset of several dozen short-term market timing newsletters tracked by the Hulbert Financial Digest.

Excerpt from the Hussman Funds' Weekly Market Comment (2/19/08):

Higher costs for energy and food last year pushed inflation up by the largest amount in 17 years, even though prices generally remained tame outside of those two areas. Meanwhile, industrial output was flat in December, more evidence of a significant slowdown in the economy.