For over a year, I’ve periodically reminded LRC blog readers that “It’s a bear market.” This parrots the phrase of Jesse Livermore, renown trader, who made more money by “sitting” than trading. The idea is that a powerful trend continues until it is clearly over.
The bear market in stocks is not over by any technical measures that I know of. I expect a resumption of downward movement soon and a move of the S&P 500 to below 700. I think the pain and squeals will be heard around the world when stocks break lower. Berkshire Hathaway ($88,140), to choose one example, will fall even more, as will many other favorites.
The fundamental basis for this move will be further realization that the basic economic problems remain, in fact, are larger than ever, and that the government’s actions have not resolved them. More bad news will crop up for bank loans. More misguided Congressional actions are likely. More foreign states and banks will have problems.
