Are we reaching the bottom of the well yet? Today's economic data alerted me to the possibility that the end of the crisis may be near. The ISM index hit the lowest level since 2001 today with only 43.5. The ISM index measures manufacturing activity in the US and is extremely correlated with real GDP. So now, we have unemployment rate almost where it was during the end of the last crisis (2001 - 2003) and ISM shrinking to multi-year low. These are important economic indicators that tell us to watch out against being all out bearish. Does that mean that the stock market is going to rebound tomorrow? Of course not! I think the unemployment rate and ISM index could still come in worse in the following months due to widespread layoffs but it certainly is time to keep a look out for a turnaround over the next few months.

On the technical front, the Dow continues its short term and primary bear trend. I made an interesting observation today that may make proponents of the efficient market hypothesis jump for joy. Since 1998, the Dow have really been trading sideways around the 11000 level with fluctuation around the mean by about 30%. Right now, the Dow is once again threading along where it were a DECADE ago, moving from overbought to oversold on this ultra-long term neutral trend. A similar pattern can be seen in the S&P500 as well with the median at around 1150 and fluctuation around that level of about 30%. Does the 11000 level and 1150 level spell the equilibrium and efficent level? If this observation is anything to go by, here's the bad news... both the Dow and the SPX are now right at that level, which means that it needs to go down another 30% to continue this pattern... *swallow*