Trader Talk

Mark Haines' legendary 2009 call

Mark Haines calls the bottom

"I'm going to step out on a limb here....I think we're at a bottom. I really do."
—Mark Haines, March 10, 2009

The Haines Bottom. It's passed into legend now, and with the benefit of hindsight, plenty have claimed that there were obvious signs of bottoms forming at the time.

But not many were calling a bottom.

Oh sure, some noted that commodities were showing signs of a bottom. Others noted there was insider buying of big stocks, including General Electric (CNBC's parent at the time), Wells Fargo, and Bank of America.

In my Trader Talk note on March 10 of that year, I noted, "The markets are showing some signs of seller exhaustion."

But all that talk is a long way from calling a bottom.

It's hard to remember how dark and painful it was in those days. Many of us present (myself included) have tried to put it out of our memories.

Here's what it was like: we had dropped for three straight weeks and could not sustain a rally. Any move off the lows was met with selling. Retail investors continued to be huge sellers: TrimTabs estimated there was $30 billion in mutual fund withdrawals for the week ending Wed., March 4.

I noted at the time the problem for stocks was simple: you cannot have a stock price without an earnings target, and no one knew what the earnings target—or multiple—should be.

And so we kept dropping.

The intraday low for the S&P 500 came on Fri., March 6, and the number was widely noted: 666. Yikes! This, from its historic high of 1,576 on Oct. 11, 2007, a drop of roughly 57 percent.

In my Trader Talk blog that day, I noted, "Traders believe a rally is coming, but few are positioned to take advantage of it."

The problem was simple: we had already had a rally, and everyone got burned. From Nov. 20, 2008, to the close on Dec. 31, the S&P went from roughly 750 to 900...a 20 percent rally.

And it all faded away.