The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

Was today the bottom?

11/13/2008

Long time veterans of Wall Street believe it is not safe to say the bottom has been reached until the market touches closing price on the worst day a second time and bounces back up. Today, the market did that and ended with a huge 552 bull run. Does that mean the bottom is here and that it is finally safe to invest some of our cash . . . or open our 401(k) statements again?

From a technical standpoint, today didn’t exactly meet the test. While the S&P broke through its previous low, the Dow did not. And, the recovery was sloppy, more like a roller coaster than a rocket. Nonetheless, we are certainly closer to the bottom than the top. When the Dow is again 14,000, will it really matter if we bought in at 7,500 or 8,500?

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