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Lowry's Analysis: Market Bottom Not Till At Least April '08

One of the greatest concerns was the considerable technical damage that was done to the market last week, a concern echoed this morning by Lowry's, the oldest technical analysis service in the country. In a note to subscribers, they said:

1) Buying power (demand) is at its lowest level since October 2006, showing that buyers are not interested in accumulating stocks at current prices.

2) Selling Pressure (supply) rose to another new high, its highest level since August 2006, indicating that the desire to sell is steadily increasing.

3) The A/D (advance/decline) line has dropped to new lows.

4) nearly 53 percent of stocks are now 20 percent or more below their highs.

Separately, I noted Friday that new lows(453 last week) were at their highest levels since the October 2002 bottom. Normally, these extreme numbers might indicate a market bottom, and there are many who are voicing these feelings. But Lowry's noted that most indicators are not close to deeply oversold yet.

So when will the bottom occur? Here's Lowry's conclusion: "Since investor psychology typically turns negative about six to nine months ahead of economic and earnings news, and, since the news is typically near its worst at major market bottoms, it is likely that the news will begin to turn decisively more negative about six to nine months after the S&P 500 Index topped out in mid-Oct'07."

That would be April to July of this year.


Questions? Comments? tradertalk@cnbc.com

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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