Today the market flirted with the 7,000 mark, crested it, and then spent the day in up-and-down trading. A late-in-the-afternoon rally almost brought the Dow to a close at the 7,000 mark, before a final tumble to close just 3 points higher than the previous day.
The intraday low was 6,867.55, meaning that the present support for this level is not firmly established. With the Dow plunging and rising hundreds of points per day, we will likely see a great deal of volatility yet to come.
The general trend for the day was a rapid peak in the AM, followed by a long steady decline. The reversal of that trend to the end-of-the-day rally somewhat mirrors the experience of 6 March 2009, when the market hit new recent lows.
The good news is that at 6,929.68, the Dow has recovered 7.6% from the low of 6,440.08. The unknown propositions are whether it will be able to remain above that point, and whether we have reached a valley, or a bump on the downward slope.
The airline industry, for one, sees that there may be some fair weather flying ahead. Delta, for one, saw “revenue trends stabilizing and not getting worse.” BofA-Merrill Lynch even upgraded JetBlue.
The issue about whether we’ve reached bottom requires everyone to consider “capitulation.” When some people simply abandon their positions in the market and take their losses. Mark Hulbert of MarketWatch is not convinced we’ve reached a point of capitulation yet, and warns that to be too overly bullish at present may be mistaking a bear market rally for the real McCoy of a reversal of a down trend.
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