The jury is still out. The prior low held on Friday. If we breach it we could of course go much lower. It seems more likely that it will hold for now at least, and we may retest once or twice more in coming months. There is a lot of money on the sidelines at present, and perhaps we are nearing the end of the forced selling. That sideline money will push the market higher when the time is right. I don't agree with those who believe that money will never return, because i believe greed will overcome despair, and when the market finally begins to rise, and it will, those who waited too long to sell, as they always do, will wait too long to buy, as they always do, and furnish the fuel along with inflation to continue the markets rise. I don't see another bull market for a very long time, but i do think 2009 will bring us a bottom. I see some well capitalized banks selling for 1/12 their book value. This is ridiculous, assuming the data are correct. I would expect most of the better capitalized and managed banks to recover eventually. Of course if they are nationalized that won't be good for common share holders.
I disagree with the "lots of money on the sidelines" theory. In reality, there has been much wealth destruction. Is all that money waiting to come out of bonds and gold going to suddenly magically prop up the stock market?
It was all that money in gold and bonds that i was referring to. I don't think it will suddenly come back to the market, but i think it will come back eventually. I imagine it will start coming back slowly once it becomes clear that the worst is over. I think the funds will be first followed by retail investors. Of course, i could be dead wrong!
Joe Six has already been fed the line about a tidy recession spring/summer. Old news and Joe Six is always the last to know. Next. Forget the slope of hope, the bottom is certainly not now, next week or next month. Try years. Start with 4.