We’ve hit a bottom, yes?

The major indices are suffering some substantial losses as we enter October with the Nasdaq leading the way lower. This past week the Nasdaq lost 10.8% and brought the year-to-date loss down to 26.6%. The Dow is down for the year 22.2% and the S&P 500 is down 25.1%. Not good news for the bullish at heart whether technical or fundamental in nature. The Dow is only 325 points above 10,000 and it wouldn’t surprise me one bit to see a test of that level. In fact, that was the lowest point reached in the index right before it took off on a 5 year bull run.

Often times a huge move down to test everyone’s “uncle” point is needed to throw the momentum in the other direction. We may get such a move this week and if we do, the important piece to watch will be how high of a bounce we would get. There is speculation out there that the Fed, along with some other central banks, is considering an interest rate cut. That would not be good for the US dollar, but might bode well for oil and the equities.