Mike Alexander

First Call of a Double-Dip Recession: Setting Up a Market Bottom?

I'm not sure what you mean. For the S&P500 here are the months when earnings and the index bottomed for five recent recessionary bears:

Earnings Index Bottom
Dec 2001 Oct 2002
Dec 1992 Oct 1990
Mar 1983 Aug 1982
Sep 1975 Dec 1974
Dec 1970 Jun 1970

Earnings bottom anywhere from 11 months before to 26 months after the index bottoms. The average value is 8 months after.

Since earnings usually bottom at or slightly after the end of a recession and the stock market is usually considered a leading indicator, one would normall expect the market to bottom some time before earnings do.

Suppose the the current Nov 2008 bottom actually is the bottom. If so one would expect the recession to come to an offically end 2Q 2009 and earnings to bottom 2Q or 3Q 2009.

A double dip recession would imply a strong recovery that starts mid year 2009 and lasts until late 2010. In anticipation the market retests the Oct 2008 bottom or forms a lower low in late 2010 or 2011.

This is what I thought would happen back in Dec 2007 (except the recovery would start in late 2008 and last until late 2009 or early 2010). See www.safehaven.com/arti...

I was wrong. There was no double dip recession, instead we headed right into the main event and with a financial panic to boot. The 2010 bottom I envisioned came two years early and sort I was forced to buy last November instead of in 2010 (see www.safehaven.com/arti...)

On Jan 02 03:30 PM Anthony Alfidi wrote:

> Waiting for leading commentators to call a double-dip might take
> a while. Markets typically don't rebound until after corporate earnings
> have bottomed and begun to ascend.

First Call of a Double-Dip Recession: Setting Up a Market Bottom?

I already made my bottom buy on 20 November:

www.safehaven.com/arti...