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Ready For Another Leg Down
 
As we've seen the markets reach the lower depths of the abyss, it's time to assess and figure out what's coming in the next timeframe.  The March/Jan lows are history, as this bear market continues to test multi-year levels.  With so much negativity, yet so much 'hope' out there, it seems difficult to believe the markets will pull into bullish mode. At worst, the downtrend continues. At best, the markets are range-bound, before the next leg down.
 
This Time, There Will Be Piling On
 
Bear raids are vicious, and look no further than recent momentum favorites.  The coal group was blasted just last week, ags, metals, nat gas and other key sectors were taken to the woodshed and shot.  When there is no place to hide, you know a bottom is near.  But, is it really?  Bears have been selling stocks indiscriminately and raising cash, not a bad thing of course.  Higher oil, geopolitical concerns, housing, credit...and these are just a few reasons.  Inflation is another one.  But the economy is also slowing, and with that there will be what are known as earnings and price 'resets'.  What are resets?  Basically, analysts redo prices, earnings and targets adjusting to a slowing environment.  Bottom line, the optimistic expectations turn to pessimism... fire in a crowded theatre.
 
When Cisco Says a Recovery is delayed, then...
 
When a big firm shows smoke, it can't be too long before you find the fire.  On Thursday, Cisco (NASDAQ:CSCO) mentioned that the recovery may not happen until 2009.  That's their best guess, but probably still too optimistic.  In fact, other companies have started to join the 'delay parade'.  We normally see this in front of a big downturn in the market.  Witness 2001, before the 9/11 tragedy.  We saw big firms come out and say the recovery was delayed, no visibility and customer cancellations.  This prolonged the last bear market, which didn't truly bottom until late 2002.  This time should be no different. 
 
Buyers are Nascent
 
Finally, let's talk about market structure.  Buyers have been absent.  Yes, we've seen a few rally attempts fueled mostly by short covering.  But for the most part, the big players are staying out of the game.  For good reason, of course...this market is difficult to navigate for a trader, no less an investor.  Where is the bottom, and more importantly... when is the bottom.  The answers won't be known of course until after we've been there.  Actions speak loud however, and for the now the sellers rule the roost.  Buy the dips and sell the rips is still the market mantra.
 
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