Selling climax could herald more gloom on US stock market

A MUCH-HYPED “capitulation” or “selling climax” is widely expected to herald a US stock market recovery, but it could do just the opposite.

After more than two-and-a-half years of slow-motion wealth destruction, investors are getting fed up and want to see the end of this horrific bear market in stocks. Some are hoping for a snappy, V-shaped plunge followed by a spiffy rally.

While bear-market routs have been known to end with a bang, a bone-jarring finale to the current blood-letting would probably be a disaster. “There is just too much stock in the hands of the public for this to occur,” says Ray DeVoe, publisher of the DeVoe Letter. “There is over $4 trillion in stock mutual funds and the question about a V-shaped climax and recovery, if the public does decide to dump stocks, would run into the classic, ‘sell to whom?’”