How Low Can It Go?

Dow soars nearly 500 points on banking plan
Existing-home sales post surprising 5% gain

The bolded part to me wasn't all that surprising, mortgage rates have been SUPER low lately, spurring a whole bunch of refinances and bringing buyers out of the woodwork. But I guess it's a surprise to most when other things have been grabbing the headlines and keeping everyone's attention.

The bolded part to me wasn't all that surprising, mortgage rates have been SUPER low lately, spurring a whole bunch of refinances and bringing buyers out of the woodwork. But I guess it's a surprise to most when other things have been grabbing the headlines and keeping everyone's attention.

All the tax incentives combined with the declined home values and low rates make it a great time to buy. Definitely not too surprising, but good news for sure.

Existing-home sales leap in June
Dow tops 9,000 after home sales data
Ford reports surprise second-quarter profit
so, dd we bottom out?

Existing-home sales leap in June
Dow tops 9,000 after home sales data
Ford reports surprise second-quarter profit
so, dd we bottom out?
Short-term possibly, however I wouldn't hop back in the market just yet.

http://www.foxnews.com/politics/2009/07/23/new-jobless-claims-rise-despite-steady-decline-spring/?test=latestnews

Bear market cycles
Nine years is short for a bear market as these cycles can last up to 14 years. When Napier wrote his book in 2005 he said we would need to see four things before a true market bottom emerged: a bond market crash, a recession, lower interest rates and a general price disturbance (inflation or deflation) leading to a final bottom in share prices.
Given that in the past four years we have only seen two out of these four factors – recession and low interest rates – at least two more things still have still to happen based on the historical precedents of the 1921, 1932, 1949 and 1982 stock market bottoms.
‘Equities will have to fall below fair value and the likely catalyst will be a bout of deflation or, more likely, inflation. There will have to be a bear market in bonds and a recession,’ concluded Napier.
‘Before the bear market is over, the DJIA is likely to decline by at least 60 per cent – perhaps something more than 80 per cent (given the current level of earnings and replacement value of assets.’
Hyperinflation scenario
That would take the Dow down to 2,800-5,600 points, sometime between 2009-2014, according to Napier. Recently the hyperinflationists like Dr Marc Faber and Jim Rogers have suggested that inflation is likely to come to the rescue of share prices and support the Dow in an economic recession.
Share prices would therefore be supported in nominal if not real value terms. Yet there is nothing from the experience of the 1970s to support this theory. You have to look at the Weimar Republic or Zimbabwe for a precedent.
It could be that the US economy deteriorates to such a degree but surely we would first see a re-run of the 1970s? And that would allow time for Napier’s bottom to be formed in US markets. Unless you think it is different this time, Napier will be right. History is always a good precedent.
And a final reason to believe the market has not seen the bottom yet: share trading volumes are far too high. You need to see a widespread aversion to share ownership before a real bottom can be called. People are still far too keen on equities.

An increase in prices during a primary trend bear market is called a bear market rally (http://en.wikipedia.org/wiki/Rally_(stock_market)). A bear market rally is sometimes defined as an increase of 10% to 20%. Bear market rallies typically begin suddenly and are often short-lived. Notable bear market rallies occurred in the Dow Jones (http://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average) index after the 1929 stock market crash leading down to the market bottom in 1932, and throughout the late 1960s and early 1970s. The Japanese (http://en.wikipedia.org/wiki/Japan) Nikkei stock average (http://en.wikipedia.org/wiki/Nikkei_stock_average) has been typified by a number of bear market rallies since the late 1980s while experiencing an overall long-term downward trend.

http://www.uschambermagazine.com/content/0907_econ

http://online.wsj.com/article/SB124753066246235811.html

Existing-home sales leap in June
Dow tops 9,000 after home sales data
Ford reports surprise second-quarter profit
so, dd we bottom out?

Yes, we did a while ago.

I expect we'll take another dip down as another wave of foreclosures hits the US in the next 12 months, but not below where we were back in the early part of this year.

We'll go down again, but then back up in 2010 as we pull out of the now-oncoming second wave of recession.

If so, I for one will say that I am happy my prediction was wrong.

. By March 9, 2009, the DJIA reached a closing low at 6,547.05 (after an intra-day low of 6,469.95[13] during the March 6 session), its lowest close since April 1997
if this holds, who was closest?

. By March 9, 2009, the DJIA reached a closing low at 6,547.05 (after an intra-day low of 6,469.95[13] during the March 6 session), its lowest close since April 1997
if this holds, who was closest?

A number of us said 6,000. Including me.

Of course jsarno also said it, so apparently the sun shines on every dog's ass.

jk jsarno

I know my buddy who is a home appraiser has been very busy which is always a good sign and he says its about 50/50 with refinacing and home sales.

I know my buddy who is a home appraiser has been very busy which is always a good sign and he says its about 50/50 with refinacing and home sales.Talking to a friend who is a real estate agent, the market for >$ 300K homes in our area has almost returned to normal, + $ 300K is still very slow.