The Silver Lining: Wild Swings Equal Bottoming Out Process?

From a bearish well respected analyst/economist.

From Merrill's David Rosenberg:-------------------Most volatile month in the 80-year history of the S&P 500From 2003 to 2007, there was not one session which saw a 4% move in the market; there were 9 in October alone. Perhaps this sort of volatility is typical of a bottoming process – we had 8 of these in September 1932, when indeed the market was in a bottoming formation. Be that as it may, we are willing to wait it out and see how the testing process evolves (see more below). The last week of October was, amazingly, the best in 34 years for the S&P 500 – up 10.5%, the best since the week ending October 11th, 1974 (the market had bottomed the week before on October 3rd). Yet, that great week did not stop the whole month of October from seeing the S&P 500 dive 16.9%, in the worst month since Oct/87 (though that was practically a one-day event). The Dow fell 14.7% last month and all 30 stocks were down, but in the final week, it was up 11.3% and all but one of the 30 stocks finished higher.Only 7 out of the S&P 100 were down this week, but only 9 were up for the month (see page B3 of the Saturday NYT). The Russell 2000 also plunged but finished the week with a resounding 14.1% gain. This is unbelievable. Oil prices were down a record 33% in the month; and gold was off 18% for its worst month in 28 years; copper and aluminum suffered their worst losses in 20 years. High-yield bonds endured their worst month ever too – negative returns of 15.5% in the USA and 22.7% in Europe, so the carnage was hardly confined to equities. The only real winner we can see was the 2-year Treasury note, which generated a 1.1% return in October – the fifth straight month of positive returns (now what other asset class can boast that result?).