Epicenter ~ It Ain’t Over Yet ~ The Market Could Get Uglier

By Betsy Schiffman October 09, 2008 | 4:54:58 PMCategories: Economy

It was one of the ugliest market selloffs in years. The Dow Jones Industrial Average Index -- a flawed but important indicator of the health of the stock market -- free fell during the last half hour of trading on Thursday to close down 679 points.

And it was a particularly brutal day for tech stocks. Out of 3,000-plus stocks on the tech-heavy Nasdaq exchange, 810 of them -- including Adobe, Cisco, Clearwire, eBay, Electronic Arts and Imax -- hit 52-week lows in Thursday’s trading, while only one stock -- Greenfiled Online -- hit a new high for the year.

Aside from the fact that a lot of people lost a lot of their savings, the selloff was distressing because it hinted that there could be more bloodshed to come.

"There’s no indication that we’ve even hit the first low," says Mark Arbeter, chief technical strategist and Standard & Poor’s. "I don’t know if many people were looking for this. It’s pretty disconcerting."

Arbeter thinks it could be a long time before the market fully bottoms out.

"Markets typically don’t put in bottoms. They put in a W bottom, with a double bottom or an inverse head and shoulders bottom, and that could take many, many months. Once we put in an initial low, and we get a decent rally that lasts more than a couple days, it could take anywhere from three months to, potentially, a year."

Looking at the last time a bear market bottomed out -- in 2002 to 2003 -- Arbeter says people didn’t start aggressively buying stock again until the Dow Jones Industrial Average hit the 7,200 to 8,900 range.

"I’ve been telling people that I think -- for a little too long now -- but I think we’re close in time to a bottom. I just don’t know where the bottom is going to be."

The Dow Jones Industrial Average sank 678.91 points (-7.33%) Thursday, its seventh consecutive loss.

Here are 10 less-than-fun facts about to put today’s carnage in perspective:

The Dow has lost about 2,000 points since a $700 billion bailout package was signed into law Oct 3.

The Dow closed at its 52-week high (14,198.10) exactly one year ago today.

The Dow hit is 52-week low today (8,579.19).

The Dow closed below 8,600 for the first time since May 2003.

Today saw the largest intraday point swing in Dow history: 868.95 points. The second largest was three days ago: 797.44, when the Dow closed down by 369.88.

The largest one-day Dow point drop was 11 days ago: 777.68.

On the first day of trading after the Sept. 11, 2001 attacks the Dow lost 684 points (7.13 percent) -- roughly the same as today.

Today’s percentage loss for the Dow -- 7.33 percent -- is the 11th largest ever. The largest percent change for the Dow occurred on Oct. 19, 1987 (22.61 percent), a loss of 508 points. On Oct. 28 and 29th, 1929 -- the crash which precipitated the Great Depression -- the Dow lost nearly 25 percent in two days.

Eleven of the Dow’s 20 worst percentage losses have occurred in September and October.

Before today’s rout, government estimates put the loss to retirement savings at $2 trillion in the last 15 months.