It looks like we have mixed evidence as to whether last week represented a Capitulatory low. My best guess is that last week will be an intermediate, though not final, low mark.
In the plus column, we have:
-Record levels of Short Interest;
–VIX spiked up over 30 (this has not been a good entry in the past);
-Merrill Lynch survey shows Fund managers running very high cash levels
-1,304 new lows on the NYSE, we saw (a record high).
-The Selling stampede lasted 39 days — unusually long
–AAII Bullish Index dropped below 25 again
-A short term peak in blog traffic
In the minus column, we have:
-Volume picked up, but didn’t match the levels seen in January or March lows;
–Bottom callers are out in full force (that’s rarely seen at ultimate lows)
-Merrill survey have showed high cash levels in January, February (and here) and March and June; As often as not, stocks went lower;
–VIX at 30 may be good for a bounce, but it is far below true panic lows of the past;
-A majority of economists believe the US will avoid a recession (why are they always the last to know?);
-Confidence levels dropped significantly, but not to prior extremes (see chart below).
Not quite down to the lows seen in October 2002 or March 2003, when the Nasdaq was off 78% . . .
UPDATE: July 21, 2008 2:15pm
Several people have written in to note that the Barron’s chart seems to be understated in past major events — 1973, 1982, 1987, etc. I do not know why — or if the chart has been changed over time — but I will inquire.