Is that the low for the stock markets?

Now that P-E Barack Obama has apparently selected Tim Geithner as the next Treasury Secretary to the approval of the financial markets, one might suspect that the stock market has set its low for this business cycle. Sure, it all depends on how well the rest of the new administration economic team comes together and hits the ground running after the inauguration with a robust fiscal stimulus plan, but it does look as if this is indeed likely to be the case. There is no guarantee any of this, but it does appear that the incoming Obama administration is coming together nicely and starting to set the stage for the beginnings of an economic renaissance in the Spring.

That said, it is possible if not very likely that short-term speculators will run the market up sharply and then back down sharply to "test" the low, and they may do that several more times before a solid bottom can be firmly established.

We will be getting a boatload of negative economic reports for months to come (e.g., the final report for Q4 GDP comes out in late March), but some of the leading economic indicators may start to show a little life sometime in January, particularly as retailers pursue post-holiday sales and euphoria over the new administration and the new fiscal stimulus plan take off. A GM, et al bailout "bridge" loan deal in December that gets the ball rolling for dramatic restructuring of Detroit could also provide the market with support. The FDIC and the Federal Reserve are both moving forward with additional support for the banks.

The most significant leading economic indicator of all is the stock market. People who sniff out a turnabout of economic activity place their early bets in the stock market. It may take weeks or even months before unemployment claims and mortgage applications begin to show a pickup in economic activity again, or at least start to show a slowing of the decline in activity.

The tentative intraday low for the Dow for this business cycle was 7,392.27. The closing low was 7,552.29, yesterday, Thursday, November 20, 2008.

The tentative intraday low for NASDAQ for this business cycle was 1,295.48. The closing low was 1,316.12, yesterday, Thursday, November 20, 2008.

The tentative intraday low for the S&P 500 for this business cycle was 741.02. The closing low was 752.44, yesterday, Thursday, November 20, 2008.

-- Jack Krupansky