Any good news is welcome
The search for the bottom of the market continues.
By that we mean the point at which stock markets stop declining and, hopefully, start moving upwards again. When this happens it will be an indication that the worst economic news is already out there and the global economy can start what will be a slow and protracted process of repairing itself.
Yesterday we saw one of those strange, euphoric days of stock trading that often happen in the middle of a bear market (declining, as opposed to bull). The FTSE 100 was up nearly five percent, the Dow 5.8 percent and the NASDAQ over seven percent.
Now before we get all carried away, bear markets such as the one resulting from the bursting of the dotcom bubble are usually punctuated by abortive rallies.
Most of the biggest one day rises in the NASDAQ occurred in 2000/2001, when the bottom of the market was still at least a year away. Also, two of the biggest rises occurred last October.
Looking at the graphs for the three indices shows that an enduring climb only occurred in early 2003 and that was characterised by a much more gradual progression, at least in the US ones. The FTSE rally happened more quickly.
