Things were actually looking fairly good during midday given how horrible the credit markets (high yield, asset-backed and corporate) have become.  Sure, the bank stocks sold off, but the stock market in the U.S. was holding its own after selloffs abroad.  But then, all of a sudden, the bottom dropped out with the S&P 500 [...]

Yesterday morning, I heard Louise Yamada on Tom Keene’s show on Bloomberg Radio giving her assessment that stocks may break below 2002 lows. I mentioned this in yesterday’s news round-up. But, now I have the audio for you as well.
Yamada is a much followed technical analyst so her opinion has weight. Since at least [...]

Related articles
Dow Plunges 400 to Below 8,000 as S&P 500 Skids to 5-Year Low

Share

I don’t think that the market as a whole is going to go up rapidly or that another bull market will soon be underway (In fact, I think we are in a secular bear market and the inflation-adjusted lows are even further down). However, I do expect a bear market rally during which new cyclical leaders may emerge. Two sectors I am watching are energy and consumer staples.

This amazing chart is interactive at the NYTimes:

Share

You have probably heard people bandy about the term pro-cyclical as it has become a key concept for economists as we enter a downturn. The crux of pro-cyclicality is that some things rise with an upswing, but fall with downswings — exacerbating swings in the business cycle. As I will explain, much of [...]

The last time faced a recession and a Bear Market of such viciousness was 35 years ago in the recession of 1973-1975. In the UK, it was truly horrific as inflation shot up to 25% and stocks dropped more than 90% in inflation-adjusted terms.
The Bear market of 1973-1974 simply does not get enough press. [...]

The Dow Jones Industrial Average has just fallen below 10,000 for the first time since 2004. Breaking through the 10,000 barrier was a huge deal on CNBC when we were partying like it was 1999, nine years ago.
Essentially, we are back to stock market levels that prevailed a decade ago — proof that we [...]

Last week, I showed two charts on returns on the Dow Jones Industrial Average that had two seemingly contradictory messages. In the first chart measuring 10-year returns, one could clearly see that long-term returns have been declining since 1998, signaling that we are in the midst of a secular bear market. And, from the looks of the chart, those declines in returns are far from over. The chart would have looked much the same had I used 15-year or 20-year returns. This is bearish for equities.

In psychology, cognitive dissonance is an uncomfortable feeling or stress caused by holding two contradictory ideas simultaneously. The theory of cognitive dissonance proposes that people have a fundamental cognitive drive to reduce this dissonance by modifying an existing belief, or rejecting one of the contradictory ideas.
Often one of the ideas is a fundamental element of [...]