Are the recent U.S. market changes typical of an average bear market?

Question

The Dow Jones Industrial Average has been playing a seesaw game for months - up 300 one day, then down, but mostly stagnating a little over 11200. If the market were in dire trouble like many experts are saying, should it have plunged sooner - or is this typical?

-Newbie

Answer 1

This is not normal.  This is a very volatile market because it is being manipulated by (1) oil price fluxuation and (2) artifically low interest rates on our debt.

Oil production is controlled by OPEC and they like oil at $100/barrell or more.  This makes our economy very fragile, as everything goes up in price when transportation costs soar.  Then there are layoffs and fewer people have enough money to chase the goods available.

The low interest rates by the FED RES are kept artifically low (our debt spending alone should cause rates to be over 15% by now, and that's a conservative estimate.)  That way, we pay back lower interest rates on our debt.  If the deficit spending stops, we can start to recover but we cannot start to recover until the unregulated spending stops.  (Remember when all of congress agress to "pay as you go"?  Well, that's out the door, no matter what "the people" want.)  

When China tells us they want more interest on our debt, that's when it will go up.  Maybe that's why  the POTUS went to the Olympics.

Hold on tight.  It's just starting to get nasty.  I suppose most of the ups and downs are due to an election year.  The fall will occur after the election.  Have a Dickens of a  Christmas.   (Can I have a lump of coal, please?)

Answer 2

Perhaps this time around the stock market is a lagging indicator for the economy.  

A lot of financial companies have made a lot of bad loans and have lost a lot of money.  But government regulators are allowing these companies to hide most of their losses from investors.  And many investors are still trading on the stock market as if the worst is over and things are about to get better.

Of course, not every stock market investor has been deceived.  Some people don't believe this story that the worst is over.  And that's why the market is going nowhere.

But sooner or later the true picture of the failing economy will emerge.  And when all investors become aware of what's going on.  Then at that time the stock market will plunge in a big way.

Answer 3

Yes, normal Bear Market action -- up, then down, back and forth, churning, very difficult to make money whether a trader or investor.

It just confirmed the Bear Market decline level of 20% a couple of weeks ago.

There has not been the panic seling seen at a bottom yet, and bottoms are generally not formed from a V-Bottom. Neither has the volatility index risen to a frantic level. This trend, i.e., no trend, will persist for awhile.