The slow painful slide
How much lower can stocks go? Todd Salamone of Schaeffer’s Investment Research believes the current market dip may be worse than the steep declines in November. Why? “Because there is less fear in the market than there was just three months ago … Moreover, unlike late 2008, investors have little to look forward to in terms of anticipating positive news, other than comments late last week in which the White House sought to counter rumors of bank nationalization.”
What’s interesting about this break through the November low is that it is accompanied by a fairly low VIX. Back in November the VIX was up at 80. Now it’s just 50. That indicates that there’s little fear and panic in the market, it’s just steadily going down, just like our economy. Circling the drain, as they say.
With a massive panicked selloff, drops of 5-10% in a day, you might expect a bounce, but when the market just goes down 5% per week, there’s no panic. Just a massive destruction of what remaining wealth remains in this country.