First of all, my apologies for posting such a massive chart.  I tried to make it smaller, but it wasn’t readable and links just don’t jump out at you like a picture does.

Anyway, this graph shows the annualized rates of return on the S&P 500 for each year, going back 182 years.  The red block is 2008.  Yes, it was a historically poor calendar year.

The good news – if you’re into mean reversion and big charts – is that the last two times things were this bad, the markets gained 30-40% (1938) and 50-60% (1933) in subsequent years.  Could this bode well for 2009?

Wells Fargo had some nice things to say about earnings this morning.  The stock is rallying 22% and was up as much as 33% earlier.  It’s unlikely to see such gains sustain themselves in the short run, but the movements clearly show you just how oversold and likely shorted some areas of the market have become. 

On another note, same store sales were also okay, although in a turn of events, warehouse clubs like BJ’s, CostCo and WalMart generally were light of expectations while other higher end, mainline retailers were generally ahead of expectations.  Could it be that we’re seeing a trickle of consumers trading back up from shopping the Wal Mart’s of the world?  It’s hard to say for sure, but it would be an expected pattern of behavior if things are indeed stabilizing a bit.