Tuesday, February 24, 2009

Dead cat bounce

The Dow hit a 12-year low Monday. It closed at 9625.28 — 26.1% below where it closed (7114.78) on Election Day 111 days earlier. The Dow had fallen 14.4% in the previous 111 days, from a closing price of 11239.28 on July 16. More dramatically, the Dow is down 19% (from 8776.39) in the 53 days of 2009.

There was some debate as to whether Tuesday’s 3.3% gain was a turning point or a dead cat bounce. Given consumer confidence and investor fears, it’s hard to see how we’ve reached a bottom.

Among the few stocks to survive the 2008 bloodbath were some of the biotech and pharmaceutical shares. For example, Amgen was up nearly 30% in 2008. Given President Obama’s forceful push Tuesday for “health-care reform” (i.e. universal health care), look for a repeat of the Hillarycare stock swoon.

February 11 cartoon by Chip Book. Bok was the cartoonist for an Akron newspaper until he accepted a buyout in its third wave of voluntary staff reductions.

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