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Market Observations: In Case you Thought Bottoms Were Easy (2002)

If nothing else, the bottoming process in 2002 serves as a helpful reminder that there is no "easy button" for market bottoms. The indicators did a great job of putting the defensive team on the field in early-June 2002, as the S&P 500 fell 25% from that point before it eventually hit its low watermark. That said, the big difference between market tops and market bottoms is volatility. At tops there is very little of it, market highs often pass investors by like two ships passing in the night, but at bottoms there is an all-you-can-eat (and more) buffet of volatility. Hopefully the graphic below does justice to the time period of mid-2002, but in all honesty you must also remember that market sentiment was at its lowest levels since the 1970s. Investors had lost much of their wealth in technology stocks in 2000 and 2001, and then when they were finally done being punished for their

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