The dollar is very weak. That helps companies which export goods, hurts companies that import them. Profits will increase for the exporters, decrease for the importers.

Interest rates are low, probably going lower. With the housing industry on its knees, the Fed can't think of raising rates, that would only exacerbate an already difficult economic problem. The ripple effect from housing is large, starting with construction jobs with lots of other industries damaged such as furniture, roofing, timber, etc. With rates most likely going lower to help fund new mortgages, the dollar will not strengthen.

A credit crunch is here. While interest rates may be going lower, that doesn't necessarily mean more houses will be sold. If banks require much higher down payments (in some areas, they're already demanding 50% on some properties), then buyers won't qualify for the lower rate money. Banks have been hit hard by bad loans, especially the subprime lenders. They won't be too eager to put more loans on the books unless they're absolutely pristine. Don't expect a quick turnaround in the housing market even with lower rates.

Oil is at an all-time high. This is a commodity that also has a strong ripple effect throughout the economy, from tires and plastics to filling up your gas tank. With China and India in economic boom times, the demand for oil isn't going anywhere but up unless these two emerging forces take a breather. That isn't forecast any time soon. Expect oil to go higher. Oil stocks will as well unless they're incompetently managed. Oil users will see margins squeezed unless they're hedged.

Consumers don't have ready access to the equity in their homes to fuel more buying. The credit crunch will affect all areas of borrowing, from cars to houses to equity loans. Don't expect the consumer to increase spending when one major source of funds (home equity loans) are drying up. That hurts retail stocks in particular.

On the good side: the DJIA is still near its all-time high. Investors are optimistic, looking past the quagmire currently swirling around them, expecting better things in the next six months to a year. The Nasdaq index is still well below its high but is leading all indexes higher a majority of the time when there are up days. Don't expect new highs any time soon, but with a preponderance of tech stocks listed on the Nasdaq, it should continue to improve.

Earnings are stellar for much of the tech sector. Apple and Google lead the way. Other industry groups, in particular, housing, are no where near healed. Neither are the mortgage bankers and some of the banks. Look for tech money to roll into housing, mortgage bankers and banks at some point soon. A lot of fast money has been made in tech, and those other industries are getting to valuations that are mouth watering. The real question is: can the tech sector repeat these outstanding earnings for next quarter and beyond? From the prices of Apple and Google, the answer appears to be yes, at least to many investors. Another sector showing great results: the airlines (UAL and Delta in particular).

Mergers and Acquisitions have definitely slowed, but they're still happening. Every day there are new deals announced. The stockholders of the company being acquired have to sell out to the new owners if it's a cash tender. Those shareholders then reinvest the proceeds, adding buying power to the market. With the credit crunch, however, all cash deals, especially ones that use borrowed funds, will be fewer. Look for more tenders using stock. Even then, many shareholders often sell the new stock, not wanting to own the combined entities. Look for some banks to merge, the ones with too many bad loans, and for mortgage bankers to be bought.

As always, there's good and bad news. If you're an optimist, you'll see these days when a sell-off is devastating to most investors as an opportunity, giving you the ability to buy stocks below their book values. You're expecting good things to happen after the next few months allow the problems to work through the economy. If you're a pessimist, you'll see the glass half empty, expecting things to get much worse. You're one of the sellers, making the decision to get out, no matter what your companies are actually doing, no matter how much their earnings improve. The optimists will find you and bid for your stock.