How Can You Help Mend a Broken Market?

There's reason to believe the markets are showing signs of recovery, but much needs to happen before a full rebound can begin to take effect, an array of experts said Tuesday.

Oliver P. Quilla for CNBC.com NYSE Traders

Coordinated action from the world's central banks, tightening in credit spreads and more work towards addressing the many ills in the housing market will be required, panelists said in a series of CNBC interviews.

There was some feeling that Monday's steep drop could be followed by an aggressive rebound, all happening while credit spreads were tightening. That provided some optimism.

"I want to feel better and importantly I want it to last so that it's not just a one-day event. It's still too early to say the feeling-better mode is going to continue for a long time," said Pimco co-CEO Mohamed El-Erian. "We need to see more on the policy side and on the technical side."

Among the moves bond giant Pimco is backing are a further cut in interest rates by the Federal Reserve as well as some type of action from central banks around the world.

"I think you're going to see a significant global move," El-Erian said. "Whether it's coordinated or correlated doesn't really matter as long as it is simultaneous across many jurisdictions."

El-Erian said that since earlier this year Pimco was hoping for some strong action before housing problems infected the rest of the market. With it being too late for that, he's looking for some significant remediation moves.

"Everybody now understands that the pipes are clogged, so the wakeup call is there. You've got to address housing," he said. "That's why it's a little bit too early to feel better. There are some signs of improvement but it's too early to say they're going to be sustained."

Too Much Selling

Investors have been looking for a bottoming point in the market for months, and Marc Faber, the so-called Dr. Doom, has joined the search party.

"The market has become extremely oversold," said the author of the Gloom Boom & Doom Report. "I think we're at one of the most oversold conditions ever, maybe not quite as oversold" as during the Black Monday period of Oct. 19, 1987.

Faber sees a rebound beginning in early 2009, and advised investors to look to emerging markets stocks as the catalyst.

"If you're playing for a recovery in the global economy whenever that comes, I think you will have to position yourself in emerging economies' stock markets," he said.

He also favors investing in gold on the belief that global central banks will loosen monetary policy and drive down the value of their currencies.

Getting Bullish on Oil

Energy's wild ride lower is about to end, said Dennis Gartman, author of The Gartman Letter, an investing guide focused on commodities.

Crude oil has tumbled off its summertime high of $147 a barrel, but Gartman said there's not much room left on the downside.

"It's very hard to be short of crude oil now. It's plummeted," he said. "Now the market's gone to a backwardation, and when the markets go to a backwardation and they tell you demand is strong, it's time to start being bullish on crude oil again."

Gartman predicted crude would fall no lower than $85 a barrel before heading higher.

"I think at $85 that will be cheap," he said. "We may get there. I doubt that we shall, and erring upon the side of ownership is probably better than erring on the side of being short."

Gartman, though, warned against commodity-related stocks because of strong crop harvests and volatile prices in metals.

Credit Looks (a Little) Better

Wall Street has adjusted its gaze in recent weeks away from taking its cues from stock market barometers and instead is focusing on a hodgepodge of rarely discussed terms like Libor, credit default swaps and Ted spreads.

Despite everything else falling apart Monday, the credit watchers were among the few to get good news.

"While everyone was focused on a major equity decline it was the best improvement in credit quality that we've seen in eight weeks across the board," said Kevin Ferry, of Cronus Futures Management. "All measures of both liquidity and systemic risk improved yesterday."

Ferry said the Fed has done its part, and now the markets will have to follow suit.

"The Fed's done everything that you should do to get to this point," he said. "We have to give it a chance to execute that plan now."

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