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Market At Bottom--Or Not? Answer Seems No

The market is dealing with multiple issues today:

--initial jobless claims creep up

--GMdowngrade

--Financial weakness on downgrades

--techs weak on guidance

--aerospace continues weak

--oil trading at top end of its range

--dollar at a three week low.

The Dow is at a 21-month low; recall that the Dow has underperformed the other indices this month because financials and autos have been getting killed, but now we have other sectors under assault, particularly aerospace, and today even techs, which have held up comparatively well, are under assault thanks to Oracleand RIMM's comments.

And still we wait for a bottom, scanning the horizon like sailors lost at sea. We look for the classic signs, including a capitulation bottom, which is not evident.

On the Street, bitter complaints we are Oversold and due for a bounce, but are we Oversold, or Underbought? Lowry's, the oldest technical analysis service in the U.S., notes that while traders are bitterly complaining about oversold conditions, the trading patterns do not indicate that heavy selling is occurring. Rather, this current down phase looks more like the market is Underbought; traders show no interest in adding to stock positions.

This is different than January and March, when we did indeed see heavy selling.

So are we at a bottom or not? Lowry's suggest we are not: "Capitulation selling has, historically, been considered one of the primary elements in signaling the final phase of a bear market. If that's the case, then the recent market low fails to qualify, as the selling that preceded the low was substantially lighter than the selling leading to either the Jan. or Mar. lows."


Questions? Comments? tradertalk@cnbc.com

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

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