Unless we see a major rebound in shares of the sort that completely reverses the losses so far this month, 2008 is heading for a wipeout.
The Fed's big 0.75% cut in its key interest rate will help steady things today and prevent a 13th successive fall.
I know its a very early call but such has been the extent of the falls (43 markets around the world now in bear territory with falls of 20% or more from recent peaks) that a recovery will be tentative and hesitant: the troubled state of the US, European and Japanese economies guarantee that, as well as the continuing doubt about the stability of banks in those countries, especially America.
Later this week we will get figures in the US on existing home sales that could very well put additional downward pressure if they signal further falls in prices are inevitable.
The Aussie dollar jumped almost 2c from just over 85 US this morning after the Fed's cut as the interest differential between the US and Australia widened.
Here the key Consumer Price Index for the December quarter is due for release late this morning and its importance has been relegated in the wake of the market falls Monday and Tuesday which saw a drop of 10% alone here over both days.
But The Fed's cut will focus more attention the CPI and the Reserve Bank's decision in a fortnight.
Those falls Monday and yesterday wiped around $140 billion off the value of the market, with some $100 billion of that happening in yesterday's 7% plunge, the biggest for more than a decade.
The market was off 5% by midday, recovered a touch and then fell sharply from 3 pm. The volume of selling orders was so heavy that the computer system at Comsec, the country's biggest broker, crashed for a short while before being restarted.
Trading information ran late and there were discrepancies between closing prices for many shares on the ASX and Comesec databases.
The ASX/200 Index closed more than 7%, or some 393.6 points to 5186.8 points – it's lowest since November 2006 – and its 12th straight day of declines.
The market is now down a quarter from its November 1, 2007 peak.
Brokers said it was the biggest one-day fall since October 28, 1997 when it shed 6.79%.
The broader All Ordinaries index was hit harder, shedding 408.9 points, or 7.26%, to 5,222 points. That was its biggest one day drop since October 29, 1997.
According to Bloomberg yesterday was the local market's longest losing streak since January 1982 at 12 days. The record is 13 days and with the US futures market indicating a big sell-off there could be more downward pressure here today.
Paul Xiradis of Ausbil Dexia told Bloomberg that the local market should stabilise in the next few days, with "some sort of bounce back in the not too distant future''.
"We've seen some international selling over the past few days and also some leveraged selling where a lot of people are stopped out of their leveraged plays and being forced to sell.
"That's amplifying the extent of the move.
"What's driving it now is fear and forced selling … not sustainable fundamental factors.''
He said stocks had not been this low for many years, representing compelling value.
Consolidated Media Holdings was one of the few stocks spared from the sell-down with its shares rising 37c to $4.23 as punters speculated in one of the few possible takeover situations left alive for the time being.
The $3.3 billion joint offer from James Packer and Lachlan Murdoch was the catalyst, but it failed to spark any interests elsewhere in media.
Fairfax lost 5.49 per cent, to $3.96, News Corp lost $1.16, or 5.33% to $20.60 and its non-voting scrip was down $1.12, or 5.27% to $20.13.
The big miners suffered, with takeover target Rio Tinto down $13.25, or 11.6% to $101.00 and rival BHP Billiton had fallen $2.29 or 6.88% to $31.00.
The market plunge has all but destroyed BHP's ambitions to bid for Rio at the time being.
Among the banks, Commonwealth Bank was down $1.93, or more than 4% to $48.85, the National Australia Bank had fallen $2.30, or 6.53% to $32.90, Westpac was down $1.27, or 4.93% to $24.50 and ANZ was down $1.85, or 7.06% to $24.35.
Macquarie Group and Babcock & Brown suffered harshly at the hands of nervy investors.
Macquarie (MQG) shed a huge $7.51 to close at $58.20 while Babcock And Brown (BNB) was off $3.44 at $14.99.
Another geared investment group, Allco Finance Group, a manager of assets including ships and aircraft, fell as much as 23 percent today. It traded at A$2.78, down 10% percent following a record 35% on Monday.
Centro Properties Group, with its highly indebted Australian and US shopping malls and struggling to refinance $3.9 billion in debt fell to a record low in Sydney trading amid concern the world's largest economy may be sliding into a recession.
Centro shares tumbled as much as 13% to 40.5 cents and Centro Retail Group plunged 29% percent to 21.5 cents.
