Was That It?
At their worst levels on Thursday, the major stock indices were bludgeoned and downright ugly. The Dow was down to 16,000 and could have been cracked open like a coconut today had the bulls not mounted a very strong late day charge. The rally was somewhat impressive and leaves open the question of whether we just saw the revisiting of the August lows I have spoken about on CNBC’s Fast Money and written about here. With stocks looking up more than 1% at the open, it will be interesting to hear what gets circulated in the media.
My take is that the odds do not favor yesterday’s low as being the final chance to get on board the train to new highs. It was a nice reversal, but I don’t think price went deep enough nor shook out enough weak handed holders during the day. In short, the decline was too orderly. I think more work needs to be done on the downside.
Looking at the calendar, it’s not a usual time to see a final stock market bottom, but that doesn’t mean we can’t see a low now. Additionally, we typically see a little more time go by from the crash low (Aug 24). More than likely, after selling off in almost straight line fashion since the Fed decision last week, the stock market needs to bounce short-term before heading lower to what I believe will be the ultimate bottom. As I continue to write, I am keenly interested in which sectors lead and lag during the rallies.
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