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From March 5, 2009 Marketimer:
The process of establishing a major bear market bottom can extend over a period of several months, as we saw in 2002-2003. Clearly, the process of registering the final bottom in this bear market has been relentless, which has rendered our efforts to date unsuccessful. This is, by far, the most difficult stock market we have ever seen. This is only the second time since the end of World War II that the year-over-year decline in the S&P 500 Index has exceeded 35%. The other occurrence, in the fourth quarter of 1974, was also accompanied by a very severe recession.
Due to the fact that the November 20, 2008 S&P 500 Index closing low failed to hold during the testing process, we believe a new bottoming process will be necessary in order to put an end to the bear market. This means that in order to set the stage for a sustainable market advance, we need to see a sequence of events consisting of (a) the establishment of an initial closing low; (b) a short-term rally; (c) a test of the area of the initial closing low on reduced selling pressure. Going forward, we expect the combination of aggressive monetary and fiscal policy measures, and initiatives to improve the health of the banking system, to favorably effect the economy.
|Excerpt from March 2009 Marketimer|