February 27, 2009
the Dow and the S&P 500 notched new closing lows below their
November 21st intra-day lows, suggesting a little more strongly that we're
in a new down-leg of this major bear market: Stocks pushed to newer bear-market lows; banks sold or shorted.
If we think that another bear-market bottom will come within the next week
or two, it follows that the economy won't hit bottom before
September-to-December of this year, rather than late May through late
August.. That would mean that the economy would continue to deteriorate
for at least another six-to-nine months.
markets dropped further today, by -1.66%
for the Dow to -2.66%
for the S&P 500. The
to close at 1,378,.
gave back 119.15
to close at 7,063,
and the S&P
to end at 735.
essentially unchanged at at $44.76
a barrel, and was gold, at $942.50.
was up slightly at 46.35.
The VIX closed today only 3
points higher (at 46.35)
than it did on February 6th (when it ended the day at 43.37),
while the S&P 500 plummeted 134
points from 869
on February 6th to 745
today (February 27th). To my untutored eye, that looks like a lot of
complacency in the face of record-breaking new lows.
Mark Hulbert has just published a somewhat different
view of what's happening, in: Making
the bullish case. He released this before the markets opened today so
this article doesn't reflect today's market action. He observes that the Wilshire
is more representative of the stock market as a whole than are the Dow
and the S&P
and the Wilshire
hadn't yet broken below its November lows. Even after today, when it
closed at 7,474,
it's still a hair above its November 20th close of 7,471.5.
Meanwhile, there are brokerage spokesmen who are
arguing that this marks a new bottom for this bear market, or that the
indices may rebound and that this dip may constitute a successful retest of the November lows (The NASDAQ
hasn't dropped below last November's low.) "'We
continue to get hit on a daily basis by very bad economic news and the
markets are trying to put in a stand here at the November 2008 lows,' said
Michael Sheldon, chief market strategist at RDM Financial in Westport,
Connecticut.", Sharp contraction.
this I believe: today's market action doesn't comport with a market
bottom. The bulls are still hopeful, and the markets slide down a slope of
hope. There was certainly no capitulation of the bulls today.
Some of the less-sanguine articles are: Banks and economy to keep bears' grip on stocks,
Short month, bitter market,
and The market's long road back.
The latter article argues that, based upon a study of similar bear
markets, it will be years before the indices reclaim their 1987 highs.
Another article, Will inflation emerge
victorious?, looks at the history of inflation, and concludes that inflation
is going to trump deflation, later if not sooner.