"Is this the end of the storm on the world's stockmarkets, or merely a lull?" asked Robert Watts and Louisa Gault in The Sunday Telegraph. "That's the question the City's sharpest brains are wrestling with this weekend."
They got their answer quickly enough once the exchanges reopened after the bank holiday. Markets plunged yet again, with the FTSE 100 shedding 2.4% in a day, and the bear case began to look even stronger.
"This partial correction has much further to go," says John Authers in the FT. Technical analysts are getting extremely worried because the sell-offs happened before exchanges could reconquer their all-time highs, which is seen as a bad sign in chart-reading circles. "Some say that we are in a bear market that started after the market peaked in 2000 the events of May suggest that the bears are right."
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Although the bears are growing in number, not everyone is in that camp yet. That means there will certainly be some scarlet faces among fund managers by the end of the year, regardless of what happens, says William Kay in The Sunday Times. "Nearly everyone was bullish in January but the sickening ups and downs of the past two weeks have scattered the fund managers like so many panicking pigeons."
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For example, Patrick Evershed and Stephen Whittaker, both at New Star, are forecasting a bearish 5,000 and a bullish 6,350 respectively. They can't both be right, and frankly splitting the difference and picking 5,675 seems as good a guess as either in these volatile times. What about Kay himself? "I sold everything I could lay my hands on a week before the first collapse."
Excellent timing from Kay and almost as good as Fidelity's star fund manager Anthony Bolton (see Guru who believes in charts). Bolton bought a put option on much of his UK portfolio just before the crash, giving him the right to sell his FTSE 100 stocks at a large premium to current market levels. As a result of that prescience, people are hanging on his words more than ever. So what is Bolton thinking now? Is he planning to cash in the option? "No, he is not," says The Guardian's Nils Pratley. "He is even hinting that he will extend its life beyond the end of June. Oh dear."
