Weekly Risk Report 11/17/2008
This week we again see the i-Wave showing very low risk levels - in fact, the lowest ever recorded since 1982.
From the onset of panic in October of 1987 to the market lows took 6 weeks. Our current peculiar market started really unraveling the first week of October, so we've now just finished the first 6 weeks. Last week tested the previous lows. There's still almost 7 full weeks until the end of the tax year and there could still be some harsh tax related selling taking place. This will affect the "bad" stocks more than the "good" (if there are any!). It is also of some interest to note that the Nasdaq Composite had recovered all but 13% of its pre-crash high by the end of 1988.
From here going forward the markets may remain rather volatile. That particular measure seems to have been charged with extra juice ever since the '07 ending of "the up-tick rule" that short sellers used to have to follow. Even with the volatility, longer term investors should start to see a more solid footing being cast between now and the end of January. Panics consume a lot of extra personal energy on the part of speculators. They will start to fatigue and change to another pattern of activity somewhat less demanding of their energies.
