A quick glance at some charts show that the low seems to have been reached in October and November 2008. Markets with the best fundamentals (i.e. Asia and emerging markets as whole except in Europe) have since rebounded sharply (+32% since the low of March 6 for the S&P500 and +49% for the MSCI Emerging Markets index since the low of October 28); the new low reached by developed markets in February 2009 (to the exception of Japan which followed the Asian market pattern) reflects the uncertainty surrounding the financial sector, particularly in the US, and worse global fundamentals (deficits, public and private debt, demographics, economy).
Since, the path to recovery seems to have been cleared. Backward looking indicators are still negative (unemployment for example) and forward looking ones more positive (consumer confidence for example).
It also became evident that the US will nationalize (or whatever you call it) banks if needed by exchanging TARP loans for equity. Investors are now looking forward and beyond 2009 that will be awful, and slowly moving their psychology from the half empty to the half full glass.
Markets are also telling us that whilst the US leash effect on world markets still exists, emerging markets, and China in particular, are leading the recovery.
In the next article, I will review a number of indicators in order to analyze whether this is a bear market rally or a the real recovery.