Wednesday, July 20, 2011

Revisiting March 2009: Over Two Years Later and Nothing's Changed

Eric Parnell

I posted an article on Seeking Alpha entitled “A History of Market Violence” on March 5, 2009. This, of course, was the day before the market bottomed on March 6, 2009 at 666.79 on the S&P 500 Index. Much time has passed since I posted this article, so I hadn’t read it for quite a while. But a comment from a reader in one of the posts over the weekend caused me to revisit it, and it was striking what I found. Even though nearly two and a half years have passed with the market rallying +105% from its March 6, 2009 trough to its May 2, 2011 peak, virtually nothing has changed. All of the same underlying problems that were plaguing the economy and markets at its very bottom are still festering today, over two years later. And in some cases, they’ve become quite a bit worse. Given where we are now in the cycle, this suggests potential downside for stocks in the months ahead.

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