This ain’t no ballgame. This bear has shown up for blood, not sport. The Nasdaq intraday hit the 20% down mark that is widely regarded as qualifying for a change from a bull market to a bear market. A close at that level would have made it as official as a declaration of a bear market gets.
As can be expected, the major index whose stocks played the largest role in forming the bull market of the last decade doesn’t die easy, so the NASDAQ bounced off the bear barrier for today, but it rests an easy day trip from officially killing the longest-living bull in history.
While the NASDAQ now hangs by its horns from the precipice, the Russel 2000, another major index, has already gone over the edge and is officially a bear market; and the Dow Jones transportation sector entered a bear market a little over twenty-four hours ago. So, market sectors are sliding over the edge faster than I can post articles now.
Of course, I’ve been saying for almost a month based on all the characteristics of a bear market that this is a bear market. So, it is no surprise to me that it keeps developing that way. If it looks like a bear, walks like a bear and bawls like a bear and bites like a bear, it must be a bear. (If you ask Russel, it certainly is.) The last time the Nasdaq entered a bear market was in 2009, and it exited in just three weeks. I’m suspecting this time lasts longer!
Consider that the bull’s paroxysms are happening when the Fed is still at an interest rate and balance-sheet height that would normally be considered quite accommodating. Consider, also, that it is convulsing in a year of record stock buybacks funded by record repatriation of foreign profits in a time of record tax breaks and hugely expanded government stimulus spending! Stop and really think about that mouthful because the Fed’s Great Recovery Rewind is so potent it is overpowering all of that muscle to throw this bloody bull over the cliff.
Read the rest here: The Great Recession
All good Ponzi schemes eventually run out of gas. Or stupid people’s money….