Shiv Kapoor

The Bottom's Within Sight - Barron's

The bottom is in for several sectors. The bottom for the braoder market is near. However, it is likely that THE bottom is not in. Energy, the leader of the last economic expansion has yet to capitulate. Frenzied exits on high volume have not been seen as yet & oil prices have stayed firmly above marginal costs of production. At this stage of the economic cycle, it is normally a market bottom because capitulation in the lead sector of the prior expansion is offset by outperformance in Financials, Technology & Discretionary. Since the contraction has been led by fundamental problems in financials and the consumer is hurt by expected tighter credit availability, I expect subdued outperformance at best - this might not be adequate to offset capitulation in Energy.