NEW YORK -- The Dow Jones industrial average broke a seven-day slide after traders sifted through the market for beaten-down stocks, but there are still signs there's not enough conviction to sustain a major rally.
Investors tried Tuesday to recover some of the big losses that piled up following disappointing economic reports. The Dow had dropped 7.3 percent in the past two weeks and on Friday closed at its lowest level since early October. The steep drop drew traders expecting to see the market bounce.
The Dow is up 57 points at 9,744. The Standard & Poor's 500 index is up 5 at 1,028, while the Nasdaq composite index is up 2 at 2,094.
Daryl Guppy, an independent analyst, said the Dow Jones Industrial Average is currently repeating a pattern seen just before the crash of 1929 that triggered the Great Depression.
However Keith Geary, the Chairman and CEO of Geary Securities in Oklahoma City, doesn't see the situation going all the way to Great Depression level because there's too many dynamics in today's market for that to happen. But on a scale of 0-10, with 10 being another great crash, Geary thinks it's a seven.
"It's pretty clear we've started a second leg down on a recession," Geary said. "Economists are notoriously wrong. They have a bad history. So what I try to do is take what they say and look behind it and look into the details behind it and for once, I'll say his [Guppy] details seem to warrant the headlines he's trying to grab."
And that's confirmed by the Economic Cycle Research Institute's weekly index. The economic growth rate has fallen the last 7 weeks from plus 8.9 percent to minus 7.7 percent. The index has a 100 percent accuracy predicting a recession once the index reaches minus 10 percent.
"I see most of our customers want to hold onto their cash and I think that's the right thing to do at this point and time," Geary said. "Be a saver going forward for the rest of the year. Try to figure out where you can pinch pennies and be a little more efficient and that will serve you well for the rest of the year."
One of the many dynamics Geary sees that would stop another Great Depression are companies themselves. He believes directors would allow their stocks to be beat down just so far before they jump in and buy their own stock.
Geary admits he's biased towards Oklahoma, but he believes that even now, we have a lot of solid companies that should interest investors.
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