How Much Lower Will Equities Go?

The S&P 500 is currently hovering around 800, almost 50% off of its October 2007 high. And while the first optimistic pieces are starting to pop up in Main Street media, a number of sources - including some of Wall Street’s powerhouses - suggest that the S&P 500 will bottom in the 650-700 area. That’s another -12% to -19% from where we are today. If you take a look at the below flurry of indicators (courtesy of JPM/Bloomberg/OECD) you get a sense of what these predictions are based upon: bad news across the board.

What do you think - are we anywhere close to a bottom?

Comments

[jp23:]

we going to have another leg down from here. with gm employees about to get axed and no solution to housing problem....these will jolt the economy even more to a down spin.

Feb 18 03:56 AM

[investor88:]

Agree sp500 in the 650-700 will be a trading buy or even buy to invest.

Feb 18 08:50 AM

[pacman1947:]

It would appear that new lows in a bear market may occur, and soon. So much bad news has created a perfect storm that the global traders and doomsayers take advantage for market manipulation. A crash unprecedented in breadth and scope becomes a reality. By the time a bottom manifests itself, we may be trading in bananas and coconuts. Anyone care to guess? S&P at 650? We should be so lucky! Unprecedented is the key word. There is no historical marker to place the bottom. 100 may be a better guess.

Feb 18 10:38 AM

[Guero:]

Near a bottom? Nope, stay the he# away from equities.

Feb 18 12:21 PM

[DavyJ:]

As long as the politicians, government officials and ex-government officials keep preaching that this is the worst crisis since the great depression, the markets will keep going lower.

They certainly aren't helping the situation with their rhetoric and grandstanding.

Feb 18 02:45 PM

[mckeddie:]

How about using some charts we can read

Feb 18 06:48 PM

[Fred Voetsch:]

Nowhere near a market bottom.

We have to unwind the leverage in the system and that is the bottom line. We have a long, long way to go; not because I am a bear (I am not) but because the evidence all points that way.

Dow 5,000 this year and probably to 3,000 or even lower before we finally hit a low. Given the governments interference we may not see that low for a decade or two, just like the Nikkei. We will not only have zombie banks but zombi homeowners as well.

Feb 21 12:43 PM

[Fred Voetsch:]

On Feb 18 08:50 AM investor88 wrote:

> Agree sp500 in the 650-700 will be a trading buy or even buy to invest.

Based on what? Hope? Your feelings? A continued drop in earning in a market that already is overpriced at a P/E of 20? A housing slump that shows no signs of abating?

I know exactly what: your past experience.

Well, my friend, your past experience counts for zilch because we are in the great unwind and there is a ton of evedence to prove it. We are deleveraging from decades of artificial wealth creation and debt creation and it will take more than a year or two to tame this monstor.

The world isn't coming to an end, the world as you know it is.

Feb 22 01:56 PM

[dscianni:]

If S&P gets to 700/650, it will be a great shorting opportunity...

Getting there would plain and simply confirm the double top it's made over the last 12 years.. a minimum target is 400, and a possible target (and a rather likely one in my view) is in the 70-200 points range.. it should take some 6 to 12 years to get there.

Enjoy the ride...

Feb 23 06:55 AM