Stocks bit it again last week as all the major indexes skidded to new multi-month lows. The S&P 500 lost more than 20 points after having posted a new 9-month low, the Dow shed almost 29 points and the Nasdaq composite slipped nearly 31 points. Gold and the dollar both continued to slip back a bit.
It was many moons ago that The Sovereign Strategist wrote that it’s exceptionally unlikely that the stock market could launch an extended rally or new bull market without the confidence of knowing what’s hanging around the late-September low. And now it looks like the market is about to find out. Both the S&P 500 and the Nasdaq are within easy striking distance of those lows and a test is pretty much inevitable.
Why are we likely to see more lows? Because we’re in a bear market, that’s why. And contrary to what you may have heard on CNBC, in bear markets, stocks FALL.