We are going to see further selling

Joe Granville states that the bear market ended on October 10, 2008, on a day when 2901 NYSE stocks hit new lows. That ended the bear market, insists Joe, so logically if the bear market actually ended on October 10, then the market has no where to go but up. Well, maybe.

Then there's James B. Stack, who writes and publishes InvestTech Research, which is a very instructive advisory. Jim believes the bear market is over, and he's out to prove it. He displays his Negative Composite Index, which has hit plus 83 (it's been there only a "handful of times in the last 44 years"), and he concludes that "we have very strong confirmation of a new bull market."

Jim then refers to the Coppock Guide which he's followed for years. According to the Coppock Guide, we are now in a "very favorable buying area." James also refers to the advance-decline line, saying that the recent decisive breakout in the advance-decline line ahead of the major indexes is a positive development. "Where breath goes," notes Stack, "the market usually follows. "

Stack adds, "Coming out of the March 9 market bottom, we saw extremely strong momentum in volume and breadth." And this, he concludes, is indicative of a bear market bottom.

Jim then points to the Leading Economic Index, a 12-month rate-of-change. His index has turned up, which, he claims, is a sign that the recession is ending" Well, maybe.

Some comments from one of Investor i follows, who belives we are still in Bear market. The market could just continue to sink with very little in the way of rallying ability, until the March 9 lows are tested and violated. The damn trouble with this market (from the bulls' standpoint) is that it shows no signs of becoming oversold, the Selling Pressure Index just keeps creeping higher, and the Buying Power Index continues to deteriorate. This is one nasty bear market if there ever was one.

Stocks sold off sharply today with all of the major averages falling approximately 2% or more. Over 70% of the stocks on the NYSE and NASDAQ traded on the downside. Leading the averages lower were the industrial and energy stocks. The only industry turning in a positive return was the hospital stocks.


The market averages closed at their lowest levels in two months. The failure of the S&P 500 to move through the 950 area is a near term disappointment for the bullish case. The S&P 500 closed at 881.03 and failure to hold 870 on the downside could lead to further selling.