User:Chakreshsinghai/sandbox 2008drop

2008 market drop
The sharp stock market decline of early October 2008 resulted in considerable discussion about the placement of a stock market bottom. The Chicago Board Options Exchange volatility index (VIX) reached levels never seen before, and a large number of new lows had also been observed. However as of October 9th the massive volume that generally accompanies a capitulation had not yet been observed.

The volume peaked on Oct 10, 2008, which was followed by a surge in the index the next trading day on Oct 13, 2008. VIX continued to rise and reached an intraday high of 81.7 on Oct 16, 2008.

Jim Cramer, founder and owner of TheStreet.com and host of the CNBC show Mad Money, expressed his view on October 7, 2008 that "we are nowhere near a bottom" He said that "three things that need to happen before a bottom in tech can occur. First, the earnings estimates for these companies need to be cut repeatedly until the companies can beat them. Second, companies with bulging inventories need to work through those inventories. And finally, the economy needs to turn around."

Ed Yardeni, of Yardeni Research stated on October 7, 2008 "I'm not sure, but that sure seemed like capitulation yesterday ... stocks are cheap, with the S&P 500 trading at a mere 10.8-times estimated earnings".

The technical analyst Jeff deGraaf stated "we’re only in about the 5th inning of the downturn." He said "The total number of new companies making 52-week lows has reached 57% .. usually when the number crosses 50% it signals a wash-out... Right now we’re 250 days into the bear market. Typically a bear market runs about 600 days."

Mark Hulbert on Oct. 7, 2008 pointed out that the Hulbert Stock Newsletter Sentiment Index (HSNSI), as of Monday evening, stood at minus 33.5%. As of immediate past Friday's close, in contrast, the HSNSI stood at minus 36.1%. This slight rise suggests that capitulation has not yet occurred.

Vanguard Group founder John Bogle stated on Oct. 8 2008, that "the stock market bloodbath is probably more than halfway over".

In an interview at night on Oct. 9 2008, Jeremy Siegel expressed the view that if  libor rate goes down to 2%-1.5%, it will result in a huge rally. He suggested a turnaround in the afternoon of 10 Oct 2008 is possible, although one can never be certain.

Blackrock Vice Chairman Robert Doll said on early morning of 10 Oct 2008 "Often you see double, triple normal volume and we've just not seen that kind of capitulation yet". However later on 10 Oct 2008 high volume was reported. "Nearly 1.1 billion shares trading hands by midday, close to half of what most experts consider enough for capitulation."

On Oct 17, in a New York Times article, Warren Buffett announced he is starting to buying stocks for his personal account. He gave a rule: Be fearful when others are greedy, and be greedy when others are fearful." On Oct 20, Forsyth noted a thaw in the credit market.