The Weekly Report for January 21st - January 25th, 2008

January 20, 2008- Market Summary
The January woes continued last week as economic concerns and less-than-stellar earnings continued to fuel talk of recession. Many jittery traders remain concerned about the state of the economy and most are wondering whether the worst is behind us. The Dow Jones Industrial Average traded 15% below its October high, contributing to the concern that we are entering into a longer-term bear market.

The broad market decline last week has erased all gains made by the market in 2007. This is technically significant because it illustrates that the bears are in control. To illustrate the extent of the weakness, one only needs to glance at the chart of the S&P - it recorded its worst weekly performance in more than five years. As you can see from the chart below, the next major level of support on the Dow and other indexes is about 5% below current levels. A move below the identified support levels would indicate a prolonged move lower, but only time will tell whether these areas will be tested.

We continue to believe that it would be extremely risky to bet on a bounce at this point and we expect that the selling pressure will continue as market participants try to determine the extent of the weakening economy. It will also be interesting to see if President Bush's $140 billion economic stimulus package will help give the economy the jump-start it needs to shrug off the weakness.

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