Waiting for Investors to Cry Uncle? Here Are the Signs of Capitulation

Another brutal day, this time without a real bright-line reason. Japan in trouble (is that news?), Europe starting to wonder about its own growth prospects and an extremely fragile mood on Wall Street combined for a dour, down day.

For several weeks, the chin-scratchers have looked for a "bottom." That elusive search has evolved into an Ahab-like hunt for "capitulation," for once that's located, the market can turn higher. Or so the sages say.

But capitulation, like a bottom, isn't presenting itself. Instead, the market is steadily bleeding lower. And despite all of the pessimism in the air, the sense is that many investors are still holding on, hoping for the market to turn.

Webster's Dictionary defines capitulation as " the act of surrendering or yielding." Phil Ruffat, senior vice president at Fuji Futures, says: "We have a different definition in Chicago: Throw in the towel." ...