where do we go from here

I would like to think that the worst is over now that the news agencies are pointing out our official bear market numbers a week ago.

http://www.bloomberg.com/apps/news?pid=20601213&sid=aOEdesvrleuY&refer=home

However, the economic news does not convey to me that we have reached a bottom. Oil dropped today, but I think its just a knee jerk reaction to the markets. Until oil trades in the spot market below 105, I would not be surprised if we tread water (at best) through the 3rd quarter. Would a 30% cut off the OCT2007 market highs be safe? I think so. That would mean about 1050 for the S&P, 10K even for the Dow, and roughly 2K for the Nasdaq. I sure would like to be wrong though.

While the SPX is certainly oversold by almost any measure, we have a rising TED spread -- 1.34 basis points versus a recent low of 0.75 -- indicating that commercial banks are finding that counterparty risk is becoming more of a concern. Banks are, therefore, less willing to lend to one another. In such a systemic crisis, it does not always pay to be an early fisher in the securities markets. My econometric models indicate that while a rally in the SPX is overdue, a tradable bottom will not present itself until somewhere around September. Until then, a good way to pass the time in a tumultuous environment is enjoying an Italian Manhattan: 3 oz. Stock 84 Brandy; 1/2 oz. Martini & Rossi Dry Vermouth; 1/3 teaspoonful lemon juice; and 2 dashes Angostura Bitters. Chill and serve garnished with a Maraschino cherry in a Martini glass. A che ora apre la banca?

to stampada: Now that is an economic model you could take to the bank ;) Dove devo firmare?

To wplaner: on the dotted line, of course, in the Devil's Book of Lost Souls [Speculator Edition]. Regards.

we continue this slightly better news/short covering rally and then we cut back to the downside once again

the end of the week looked like it could be the end by virtue of the sharp down spike and then reversal, but all to many people were saying that it could be so that makes me think that it probably isnt