The S&P

“I’ve been doing this for the last 30 years, and this ranks right up there with the crash of 1987 with regard to how my stomach feels”

—Bernard McSherry, SVP at Cuttone & Co., one of the largest floor brokerages at the New York Stock Exchange.

  • Grew sevenfold from 223.92 to 1,527.46 between Dec. 4, 1987, and March 24, 2000
  • Doubled to 1,565.15 on Oct. 9, 2007, from 776.76 five years earlier, but since then…
    • Financials are down 52% since the February 2007 record
    • Energy is down 27% since the May 2008 record
  • Fell 4.7% September 18th to 1,156.39 
  • Fell 7.6% from the 15th through the 17th
    • A couple of issues:
      • The government backstop on Bear Stearns ($29b)
      • The government seizure of AIG ($85b)
      • The bankruptcy of Lehman (+$700b)
      • The first nationwide decline in US home prices since the 30s
      • Writedowns connected to subprime (+$500b)
      • Credit Default Swaps (CDS) hit $62t in notional value in 2008, up from $144b 10 years ago
  • Trading patterns suggest more losses, “so-called retracements of 50%typically precede further declines, according to some traders who look at historical prices and charts to make decisions.”

You could get some rally, but I don’t think you’ve made a low. The whole way down we’ve consistently seen lower highs and lower lows, and that pattern has yet to be broken.

—John Roque, managing director and technical analyst at Natixis Bleichroeder

  • Futures rose 1.5 percent to 1,180.4 at 12:03 p.m. in London

“We’re closer to the end than the beginning. The reason fear is so good is that what idiot is left that hasn’t sold? It means there are a lot of people on the sidelines with dry powder.”

—Jim Paulsen, chief investment strategist at Wells Capital Management in Minneapolis, with $220 billion under management.