There a boatload of money on the sidelines. No, make that a navy full of boatloads of money. I've heard $2 Trillion and more thrown around as the number, although I'm not sure how one determines what money is on the sideline and what money is just outside the market.
I keep going back to the technicians way of looking at things - why not, nothing else makes sense and I don't know anything about reading the entrails of chickens - to try and get some tiny bit of clarity here. My latest [-]voodoo[/-] technical interest is Fibonacci retracement.
Note that I'm not espousing the theory, just tossing it out for discussion.
Anyway, current discussions and prognostications I follow elsewhere have discussed the potential for a Fibonacci retracement upward from 700-ish on the S&P, or, if it breaks that level going down, then from around 650. We're talking a quick, violent, and pretty massive upside - not back to where we were but close - 30% being the minimum. But it's generally seen as something that won't stick around for long.
And that last little bit is the one that has me wondering if this thing we're in right now might not have a bigger downside. Something like 1929 - 32 in which the market goes down about 50% (sound familiar?), then has a rally in which significant retracement takes place, followed by several years of a continual slide that goes past the previous low. Far enough past the previous low to make one fondly recall the days when we were down by only 50%.
I can deal with where we're at now. Don't like it - but I can deal. And I can handle a lengthy "L" shape on the recovery with an eventual, if very gradual, clawback upward. Like everyone else I've lost ground, years worth of it, but I'm still okay here and even a little lower. But the prospect of something like 1930-1936-ish is disturbing. '29 was bad, but the stuff that came later was worse.
