The market will regain its footing once we know who the next president is, people were saying a couple weeks ago. Sure, it's chaotic now, these people said, but resolve the election and we'll see a rally.
Well, we've known who the president-elect is for three days now, and all the stock market has done is go down. Friday, both the
were threatening new lows. And so those people were singing a different tune, saying that maybe resolution didn't resolve things, and maybe looking for the bottom is a sign that one isn't in sight.
"I think that 36 days was maybe a bit too long, and more damage was done than might have been expected," concludes John Bollinger, head of
and formerly one of those wait-for-resolution people. "Now you have the S&P probing the lows and testing some very important levels, from a psychological perspective."
At midafternoon, the S&P was around 1325. The closing low on the index this year Nov. 30's 1314.95, with an intraday low of 1294.90. The hope is that those levels will hold, and that the investors who stepped in and bought the last time will still think of these as good prices to buy at. The Nasdaq, off 52 at 2676, is also testing its Nov. 30 lows.
"If they can hold, that's a good thing," says Todd Clark, head of listed trading at
. "But I don't see any reason to expect them to. The market is acting like" ... not very well, Clark says.
One thing that we haven't seen in this latest decline is the steady march of technical analysts and other gurus talking about how the market has bottomed. No talk of how this is finally it, the cathartic selling that has wrung out all the weak holders has finally arrived, and now we can begin anew. (The funny thing about real cathartic selloffs is that people aren't hanging back and scratching their chins over what's happening -- they're busy freaking out and selling stocks.)
This, at least, is a positive, says Bollinger, the guy who invented those things called Bollinger bands that come with virtually any charting software. People got too wrapped up in calling the bottom, in identifying the big capitulative selloffs that they'd seen in the falls of 1997 and 1998, that it just didn't work anymore.
"Too many people were looking for it," he says. "You need to abandon an opinion when it becomes a majority opinion."
So could that mean that this is it? The bottom's really here?
Shut your mouth. Look busy.