Monday, July 07, 2008

Congratulations - It's a Bear!

By an amazing coincidence, the S&P 500 index closed today at 1252, the precise threshold of a bear market. This is exactly 20% lower and 9 months after the October 9 high of 1565. With the Dow already in bear territory, there's no denying it any longer: we are in the second bear market of the decade.

It's not unheard of to have two or three bear markets occur within 10 years of each other. Notable bear market groups now include:

1929-38
1937-46
1961-70 (three bears)
1966-74 (three bears)
1973-82
2000-2008

In fact, looking at that list, I'm inclined to think most bear markets occur in groups.

By the way, most of the indicators I look at are saying that there's still room to fall from here before the next short-term/sucker rally. My long-term forecast made in January still calls for the S&P to eventually fall to 940.

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