I Am Calling Two Bottoms:

First and foremost, we should all know by now that the markets do not move in a single straight line / direction. You will see ups and downs based on economic, geo-political, earnings and emotional news (e.g. fear). However, these up and down moves create a certain trend and as we have observed, the current trend is down... Keep in mind that NOTHING has beat the DOW since inception for example (1928 to an all-time high in 2007) - there has not been a better investment historically than the DOW - whether you're a believer or a non-believer, this is simply a FACT!

And this is only true because the United States is a land of entrepreneurs and folks that always find the way to make life easier and more efficient / productive by creating goods and services for consumers that simply stimulate the general population to spend / buy these goods from innovative corporations - these corporations make these products keeping their expenses down in order to make a profit - and here lies the key to the DOW's performance; that is, profits! Without profits, stocks DO NOT go up. Now, a corporation's biggest friend is the general consumer - these two will be married forever as one cannot exist without the other. The problem right now is that very, very, very few consumers have disposable income and / or are spending any money today. The general public is hurting out there and I personally do not see any hope or light at the end of the tunnel in 2009 - and if you do not agree with me, is ok - only time will tell who's right here.

There are some very good companies that have survived rough times in the past and will continue to survive in the future (e.g. EMR, ARW - see article by Darrell Rigby, "Moving Upward in a Downturn" from the Harvard Business Review - Product Number 6846). The key for investors is to continue to find those strong companies with great management teams in place to navigate through the rough waters (e.g. IBM, WMT, JNJ).

It is time for good companies to go back to the basics and focus all of their attention and energy on their core business and the business that they are good at without deviating from their core business in good times (e.g. Citigroup). Companies that can do this will last forever - creating value for consumers is the key! Only the consumer will alleviate the pain but, the consumer has no purchase power at this point and until this is fixed, things will simply not get better; government, and Wall Street, not withstanding.

With this in mind, and the time that will take consumers to recover, get jobs and spend money again, I see the downturn lasting all throughout 2009 and a real / confirmed recovery in Q3 of 2010. Therefore, the DOW will hit 6000 and possibly trend down to 5000 and this is when most folks will lose their minds and throw in the towel - this point, will mark the bottom thus, the start of a recovery.

DOW 6000 will definitely come even if it happens in-traday. I will monitor performance from there to continue to forecast and monitor DOW 5000.