Wednesday, July 02, 2008

On the precipice

The stock market crossed a few important barriers today, but I think the most critical goalposts still lie ahead. The Dow 30 index has finally closed in bear market territory, (down more than 20% from October 9) but the S&P 500 is still 9 points away from an official bear. For its part, the S&P 500 ended today with the lowest closing price since July 2006, but it hasn't yet passed below the intra-day low of 1256 reached on March 17 of this year.

I'm convinced that the S&P 500 index level of 1252 remains key to the resolution of the current market downturn. A close below that level would mark a new multi-year low for the S&P, and would place both major indexes in an official bear market. Then we might see some real panic.

Stay tuned!

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