Dear Value Seeker,

The center cannot hold.

At least it seems that way from where we’re sitting.

Yesterday, the Dow closed below its October lows, breaking through the psychological barrier of 8,000 points.

The S&P 500 ended the day at 806, its lowest reading in six years.

Who knows how low stocks can go from here.

Nicole Elliott, a technical analyst at Mizuho Corporate Bank, says the Dow will sink to 6,400 within the next few weeks.

There is chatter among quants of a “Bermuda Triangle” setting itself up in the Dow charts.

We’re not sure what this means exactly. But it sounds bad.

Word is the Dow is now bouncing around within this triangle, posting lower high after lower high.

We do know that the losses are getting scary.

The planet’s losses from the sell-off of equities have now reached more than $30 trillion – or more than twice the GDP of America!

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Since the beginning of the year, the Dow is down 35 percent. The S&P 500 is down 40 percent.

The losses are so bad that one third of S&P 500 companies now longer pass the $4 billion market cap threshold required to be listed on the index.

It’s no wonder businesses are slashing their workforce. Here are the lowlights from this week’s jobless data:

• New jobless claims spiked to 542,000 – the highest since July 1992

• Trailing 4-week average dragged up to 506,500 - the highest since January 1983

• Continuing claims rose to over 4 million for the first time since the early 80s

Citigroup (NSYE:C) is leading the corporate cost cutting program.

This week, the mega-bank announced plans to hand 50,000 workers their pink slips in the “near term.”

It also liquidated one of its hedge funds.

Citi’s stock is down almost 50 percent from the start of the week.

It seems faith in banks – and the private sector in general – has all but disappeared.

Bloomberg reports that the cost of protecting against default on investment-grade debt soared to record highs. Meanwhile, the yield on short-term US Treasury notes has fallen to record lows.

On to today’s picks…

Don Miller at Morning Morning says we should expect a whole lot more pain in the housing market next year.

Rising unemployment and crumbling consumer confidence will lead to more foreclosures.

This will add to a backlog of inventories and put further pressure on house prices.

Investors can play this trend by shorting individual US homebuilders or the iShares US Home Construction ETF (NYSE:ITB).

However, the government changeover – and the potential for a raft of new policies – means extreme caution is required.

Marc Lichtenfeld at Smart Profits Report says some beaten-down US stocks are due a major rebound in 2009.

He recommends seven proven survivors that are among the biggest and best in their industries. He also picks two small caps that are well placed to lead a market turnaround in the coming year.

Morning’s Keith Fitz-Gerald says sticking with a value-investing discipline is the best investing strategy right now.

Choose companies with low or no debt, a high proportion of international revenue and a history of solid dividend growth.

Keith gives five tips on how to identify real market value and make the right purchases for big profits when the market recovers.

Finally, looking beyond the US, only three global stock markets up on the year are Ecuador, Ghana and Tunisia.

But The Sovereign Society’s David Newman says investors should not be tempted by some of the mega bond yields on offer in some emerging markets.

Countries such as Argentina, Ukraine and Pakistan are teetering on the brink of collapse.

In this climate, David says it’s prudent to stick to the sovereign debt issued by industrialized states.

Happy Hunting,

Will Bonner,

Publisher,
Hidden Value