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Market Decline: Shake Down or Shake Out?

Yesterday’s market rout begs a number of questions, according to Richard Ross, Head of Global Technical Strategy for Auerbach Grayson, a NY-based brokerage firm:

Is the sudden global decline a Shake Out or Shake Down?

Has the world really changed overnight or had it never really changed that much back in March?

Was the 50% run in the S&P 500 just a “Bear Market Rally” or the beginning of the next great “Bull Market” advance?

The data, he says, seems to suggest both Shake Out AND Shake Down.

Here’s a look at how stocks in the Standard & Poor’s 500-stock index performed yesterday, as well how much they’ve gained since hitting 52-week lows:

Download file

Ross says that his analysis suggests that we’re experiencing a “healthy Shake Out within the context of an ongoing Bullish Advance, rather than a Shake Down at the end of a Bear Market Rally.”

What do you think?

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