ETF Expert

In one more month, we will have put the cap on one of the worst years for all major assets (e.g., real estate, stocks, bonds, commodities, etc.). At the root of it all… the financial credit crisis. And at the root of that… individual greed, corporate stupidity and diffusion of responsibility by government regulatory bodies.

Ironically enough, however, the recession did not officially begin until July 1, 2008. That's because, technically speaking, 2 consecutive quarters of negative GDP growth will not have occurred until the Q4 GDP numbers show inevitable economic contraction.

Yet one only needs to look back to see that the media began talking about the recession, as though it were fact, in the middle of 2007. The media motivation for its description, fairly or unfairly, was tied to "Bush fatigue," not to the numbers.

Nevertheless, most of us accept that we began the "common sense" recession in Q4 2007, where the economy did contract slightly for that single quarter. And it may have been confirmed by our first official month of significant job losses in January 2008.

So here's the hypothetical question gnawing at me? Are technical definitions meaningless?

Consider the following: After 5 days of gains for the S&P 500 (SPY) SDPR Trust is up 19.2% from its closing low. Technically speaking, a bull market is a rise in value of the market of 20%. Does that mean we are less than 1% away from the start of a new bull market?

If indeed we do surpass 20%… if all of the major U.S. barometers (i.e., Dow, Nasdaq, S&P 500) do climb 20% off of their lows… technical definitions will be dismissed. Like the common sense recession, we will continue to hear that this is still a "common sense" bear.

Truth be told, it'll take months, even a year or more to be sure of the actual bottom. We only have to look at the fact that,technicallyy, the 2000-2002 bear ended in October of 2002. Yet we retested lows in March 2003, and it wasn't until October of 2003 that the media confidently proclaimed a new bull market.

Indeed, there's every good reason to believe that November 20, 2008 may have been a "bottom" at Dow 7551, at S&P 752. Just don't be surprised if we'll need still another year before a bull market start will be given a place on history's shelf.

Disclosure Statement: ETF Expert is a web log ("blog") that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Advisor with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.