Thursday, August 17, 2011 4:44 PM – Retesting the Market Lows

As I wrote earlier, volatility has earned after a brief break the last few days. Here at the #s:

S&P 500 -4.5%
Dow -3.7%,
Nasdaq -5.2%
Small Stocks –5.6%
European & Asian Stocks -4%-5%+
Gold +1.9&
Corp. Bonds +0.1%

(Click Chart to Enlarge)

I wrote quite a bit last week on the likelihood of a retest of the lows from last week. This is normal after the kind of selling climax we had 10 days ago.

This sharp selloff today gets us to within 2% of the recent bottom. If stocks close at least 1%-2% below that level or even if we recover by less than 3%, stocks will likely head well below the old lows, maybe as much as 8%-18% lower than today. Right now, I think the odds are about 50/50 for breaking the old lows.

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