Wall St.’s rout makes finding the bottom a headache
Written on October 12, 2008
Predicting a bottom for the U.S. stock market has been a thankless task in recent days, with indicators that typically signal the end of selling pressure yielding little help.
The three major U.S. stock indexes are each down around 40 percent for the year so far. But analysts said the bottom may be a long ways off as fear eclipses technical indicators.
After a precipitous eight-day slide for the broader market through Friday, there remained a growing discord among market technicians and analysts as to whether the market has seen its worst days or not.
In Friday’s wildly volatile session, the Dow Jones industrial average .DJI swung 1,000 points for the first time ever between its intraday high and low. The Dow briefly dropped below 8,000 for the first time since April 1, 2003, and then rallied over 300 points late in the day — only to give up those gains and close down 128 points at 8,451.19.
Volume was exceptionally heavy, with 2.95 billion shares changing hands on Friday on the New York Stock Exchange — the highest NYSE volume ever for a day that doesn’t include the quarterly expiration of stock-index futures and options, according to a blog posting by Ray Pellecchia on NYSE Euronext’s Web site. In comparison, last year’s daily average was 1.90 billion shares.
In one sign of just how unsettled the stock market has become, investors clamored for a coordinated interest-rate cut by the U.S. Federal Reserve and other central banks. But when the central banks gave the market what it wanted, stock investors still were driven by a heightened sense of fear.
Even though selling volume exploded, it is not providing clear-cut signals that the market is near some turning point or that the sellers will soon get exhausted, said Cleveland Rueckert, market analyst at Birinyi Associates Inc in Stamford, Connecticut.
“There’s nothing that you can put a finger on and then say this one thing has changed, now you have the bottom,” he told Reuters. “People are worried about earnings right now — the prospect of a deep recession. Nobody wants to own stocks.”
Filed in: money.