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Anecdotal evidence of a bottom or top in financial markets is only obvious retrospectively. When markets are falling or rising, there are always noteworthy items or events that could be viewed as anecdotal evidence of a bottom or top, only for the market to fall or rise even further, with more pieces of anecdotal evidence occurring as the bust/bubble continues.

Having said that, we here at Running of the Bulls have been searching for anecdotal evidence that the market is bottoming, which we believe is in the process of doing. For example, Bill Gross of PIMCO is on record as saying equities are essentially dead. Better yet, Meredith Whitney starting her own firm probably marks a bottom in the financial stocks.

At every extreme, investing legends get taken out. In 2000, famed hedge fund manager Julian Robertson shuttered his fund right at the very top of the Tech Bubble, proclaiming that he no longer understood how markets worked. Now we have David Dreman, who was fired last week as the head of the fund he started.

David N. Dreman was a star mutual fund manager. Then he bought bank shares and held on as the financial crisis grew.

Now he has been fired from the flagship fund that bears his name, despite what remains a good long-term record. The fund’s name will be changed, and the fund will take fewer risks. A drab industry will become a little drabber.

In the past, the firings of once-celebrated fund managers have sometimes provided a market signal of its own — that the trend that led to their poor performance was about to end. If that were to happen this time, there could be a revival for so-called value stocks, and particularly for the beaten-down and almost universally disdained financial stocks.

By the way, betting against the financial sector in general is a bad bet here (though specific financial stocks may still go to zero). The KBW Bank Index, or "the BKX" has fallen 85% from its high a few years ago to its low a few weeks ago. For comparison, the Nasdaq fell 77% top to bottom after the Tech Bubble collapsed while the Dow fell 89% during the Depression.

If we aren't at a bottom in financials, we are awfully close to one.

Source: Financial Markets in Process of Bottoming