Saturday, February 28, 2009
The Canadian TSX Composite Index is teetering on the edge of doing the same thing. On February 24th it went below its November low during mid-day trading. So there is little hope that Canada will avoid more downside as well.
We should expect the bear market to retrace something more than the ~50 percent loss to date. This bear market is now officially the second largest market loss since 1929-1932 (-89%).
Thursday, February 26, 2009
Wednesday, February 25, 2009
All the major North American stock indexes have either broken below their November lows or they are within a hair's breadth of doing so. The Nasdaq is the index that has the farthest to drop before that happens. It makes me wonder why.
Apple Computer's reluctance to join the next stage of the bear market appears to be one of the reasons for the Nasdaq Index having the farthest to fall. Even Microsoft has had the decency to join the bear party and break it's Nov. low. And, Microsoft has recently warned that their business will suffer during the bear market. Make perfect business sense to me...new computers and the latest software are, in many cases, a luxury that individuals and businesses can postpone to save money. I would guess that Apple Computer will also see lower earnings with the drop in PC sales.
I still think the Apple will fall and we will see a large drop in the price. Based on what the rest of the market has done recently I don't expect we have long to wait before Apple breaks its November low. If that happens, as the Apple falls it will help bring the Nasdaq and other indexes to lower levels.
Monday, February 23, 2009
However, there is another worse case scenario we should keep in mind. It is the possibility of a long duration, more or less sideways bear market, similar to the 1968 to 1983 time period. A lump sum held in the stock market through that entire 15 year period would have earned 0 percent in capital gains.
In fact, we may already be in one of those sideways market periods. It may have begun back in 2000. More so for the US than in Canada. Many stocks started their bear in 2000. Those stocks have already been in a bear market for the last 9 years.
In the short term, I continue to see a high probability of at least some additional downside below the November lows for all N.A. indexes. Likely world wide.
My expectation is based in part on the fact that the DJIA, the DJTA and the TSX Capped Financials and the TSX 60 (as of today) Indexes have all broken below their November lows. In short, we have an abundance of evidence to demonstrate the Dow Theory Trend Continuation signal has been given loud and clear.
Some people continue to hope for a large bear rally at this time. Unfortunately I see little opportunity for this to happen. In fact, a large bear rally may not even happen during this bear market if it goes much deeper. That pattern is only one possible bear scenario...one leg down one leg up then a final leg down.
If a bear rally does occur, I see it starting at some lower level, not starting from the Nov. lows, and not now.
Thursday, February 19, 2009
Tuesday, February 17, 2009
It looks like it may have started this am. The charts indicated that the stage had been set for "this possibility". As always, this was just one possibility for the markets.
Sunday, February 15, 2009
There have been periods of time when the market would have tested the patience of anyone subscribing to the buy and hold approach. The periods of market history I refer to are the 1929-1954 and the 1968 to 1982 time periods. The markets, as defined by the DIA Index, took 25 years to recover after the 1929 crash. And, the ~1968 to 1982 time period although a less severe bear in terms of depth (-45 % compared to the -89 % loss of 1929) but it was a time period where the market went sideways for about 15 years.
It is easy to show that for these two time periods, a lump sum, that was invested at the pre-bear peak, would have performed much better had it been in a nominal rate GIC. The green lines on the graph of the DJIA show a few recovery times, including the two mentioned above.
Saturday, February 14, 2009
Friday, February 13, 2009
Thursday, February 12, 2009
Wednesday, February 11, 2009
Sunday, February 8, 2009
Monday, February 2, 2009
The DJTA Index may turn out to be this months canary in the coal mine. If the DJIA Index also breaks below it's November low then this we create the classic and time proven Dow confirmation of a continuation of the current trend. The current trend is a bear market downward trend. In other words, a technical analysis confirmation that the bear has not ended.