Dow Breaks 8,000, Is This The Bottom?

Today the Dow lost 427 points and closed below 8,000. Perhaps that is exactly where it should be. 

Back on 10/28, the Dow closed at 9,065.12 after rising 889 points during an extremely volatile session.  Traders were jumping for joy while I played the pessimist telling everyone to beware of the 900 point pop.  Prior to the pop, I also said I thought we were nearing the bottom.

Much to my surprise, the Dow popped back up and many thought the worst was behind us, but not me!  The index had no business being above 9,000 so soon, especially in the midst of such economic uncertainty.

The Dow sank below 8,000 on 10/10, but today is the first time it closed below 8,000 since 2003 and things will get worse before they get better.  I don’t think things will get too much worse, but if you look at the figures on unemployment, housing and spending there would be no reason for the Dow (or any index) to make solid positive moves.

Earlier this week the Philly Fed announced that the U.S. economy entered a recession in April. The recession is expected to last for fourteen months.  Shopping is the last thing people think about in a recession, but if you have some room in your budget I would recommend some holiday shopping in the stock market!