When Will The S&P 500 & DOW Jones Bear Market Bottom
With the markets tanking, many wise investors are wondering when and where will the bottom be put in so that they can return to investing.
Before I give my forecast, let me start by saying that from a technical standpoint, we’ve seen these downard signals, levels and patterns reached before, just never this quickly.
S&P 500 Bottom Forecast
There is so much information in this chart that I actually feel comfortable forecasting a bottom in this market. However, this forecast assumes that the 800 price level holds (which I believe it will).
The previous bear market started in March of 2000, and bottomed in November 2002, almost 31 months. The current bear started in November of 07, meaning we are now 11 months into the current bear. Since these markets are very similar, it could be forecasted that the bottom should come in around June of 2010.
However, while the patterns of these markets are very similar, the actual slope of the decent during this bear is much steeper. How much so? 150%. Using this data, the bottom could be forecasted at around 20 - 21 months, or, somewhere between August and September, 2009.
There is one more possibility I’d like to consider. Over the past 2 months, the rate of decline has increased significantly. I believe that momentum will actually shave some addition time off the race for the bottom, and, you read it here first, I belive the market will bottom in May, 2009.
I’m working on a video to explain all of this. Stay Tuned.
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so, to be clear, you are saying S&P bottoms at 800 or so in May of 2009?
What do you think about the banking sector — do you think we may have touched bottom there alreayd?
Brandons last blog post..Gold: Time To Short? 10-17-2008
Hi Brandon,
Thanks for the question. I do believe the S&P level 800 will hold. Support in that area is very strong, and if the market were to close below that level and stay there for a couple of days, the technicals become very scary!
Of course, picking May is really just taking a stab. Trying to predict bottoms and tops is akin to those psychic networks. My point in choosing that date was to show that even though we are near bottom levels, don’t expect a sustainable turn around right away. This financial mess is going to take time to unwind, and bottoms usually take time as well.
As far as the banks, did you want me to look specifically at banks, or the entire financial sector? I’d be glad to write a post about either or both.
Do you believe that 4th qtr GDP will be negative?
What is your opinion of financial sector late 2009?
When will housing sector bottom? Why?
Hi Ali,
All of these are excellent questions. I just got home from an 18 hour day at the office, but I primise I’ll answer them tomorrow after a decent night’s sleep!
[...] contrary to popular opinion that we’ve put in the bottom. In October, I predicted that the bottom wouldn’t be in until around May of this year. I still believe that prediction is accurate, although the level I predicted on the [...]