Stocks have rebounded lately. The Dow is back above 700 and the S&P is closer to 800 than 700. It was just two weeks ago when analysts were discussing the possibility of the market heading below 6,000. A Wall Street Journalarticle discussed the possibility of the Dow sinking below 5,000 or the S&P going below 500 with several analysts saying it was possible.
While Silvant sees the S&P staying in a range of 650 to 750, a decline to 500 is "definitely possible," Mr. Guinther says.
A level of 500 on the S&P is "possible, but I wouldn't put it in the realm of probable," says Thomas Lee, chief U.S. equity strategist at J.P. Morgan. Mr. Lee on March 2 removed a tentative "buy" recommendation he had placed on the S&P in February.
For Mr. Lee, the S&P at 500 "would imply that we are now in a period similar to April 1932 -- the final stages of a bear market."
Between April 8, 1932, and July 8, 1932, stocks fell 34% -- a little more than what it would take to get the S&P to 500.
A level of 500 would take declines for the S&P to 68% since its October 2007 high, compared with the peak-to-trough depression-era slump of almost 90%.
It's certainly possible the stock market could see lows again. We haven't really had any sectors reporting positive growth that would kick the market out of its bearish cycle.
