We keep making new lows. Maybe Thursday was the washout. We finally broke the 10/10 lows and the 2002 lows. I don't think it is the final bottom. It might be a short term bottom perhaps even a intermediate bottom but not the final bottom. My reasoning is simple. This is much much worse than 2002 in every metric you want to measure, so I think the stock market low will be lower. How much lower? If we go into a depression which I don't believe we will, I don't think we will fall the 86% we fell in the thirties. We have an active Fed and government that we didn't have then. We are a much less manufacturing economy now. We have FDIC insurance and a wide range of social safety net programs we didn't have then. So I think the low will be somewhere between the 50% we are down now and the 86% we were down then. For lack of a better crystal ball, lets take the middle, which is roughly 68% and translate to an S&P of 500. Yikes! Seems improbable but consider we hit a high of 1007 on election day and Thursdays low was 746. That occurred in less than 3 weeks!

The problem in trading is how to turn prognostications into profit. That depends a lot on not on how right you are but on figuring out how the market will get there, what will all the twists and turns be. You can't be too early, you can't be too late, you can't get whipsawed. You have to be right within all the proper risk controls with a meaningful position. The speed of the move lower from 1255 on Sep22 to a low of 750 last Thursday Nov20, less than 2 months 43 trading sessions 500 S&P points certainly caught me off guard. Took profits too early. That's the problem going forward. Will we just continue to fall or bounce or trade sideways until the final low has been made. It is certainly difficult to commit new funds to the short side at these levels. The only confidence I have is to sell any rallies that get back to the 1000 level and to sell out of the money calls in the stocks of your choice as deflationary recessions do not end quickly. When and at what price we do hit bottom at, I think we will languish there for quite some time as the market goes through a period of apathy.