Sign that US stock market has bottomed out
The big question on very stock investor’s mind is if the stock markets have found their bottom. Are we there yet? That’s what stock investors want to know as they search for a bottom after six punishing months for stock markets. Investors have lost money in this downturn and want to see the stock markets move forward.

It’s a tough wish at a time when the U.S. economy is in a recession and is clearly contracting. The good news is that stocks typically recover several months ahead of the economy. The bad news is that we’re probably closer to the beginning of this slump than the end.

Debate rages about what stage US economic crisis is in. Some are optimistic that the US government’s moves to flood the economy with liquidity means a shallow recession or none at all; others believe Washington alone can’t repave deep potholes on Wall Street and Main Street, and are braced for a long, bumpy road ahead.

Remember that the stock market will show signs of bottoming well before every bit of bad economic news is wrung from the headlines. These milestones won’t be obvious or appear at once, and keep in mind that just because stocks stop going down doesn’t mean prices will head back to new records. The damage to the economy is done, and will take time to repair.

Knowing what to watch for can help you invest with greater confidence and help you Find Stock Market Bottom. Here are five key leading indicators to put on your radar, along with five cautions to keep them in focus:

1. Investors Intelligence survey

Home values are down, unemployment is up, consumers are tapped out and so, for that matter, are lenders. Consumer confidence hasn’t been this bleak in more than 25 years, and people’s expectations for the economy are the worst since the inflation-ridden mid-1970s.

Reflecting this grim mood, almost 80% of Americans say the country is worse off than it was five years ago, according to a recent New York Times/CBS News poll.

No surprise then, that more investment professionals are bearish nowadays on U.S. stocks than bullish. But from a contrarian viewpoint, that’s a positive.

“The longer it takes for people to throw in the towel on bearishness, the more bullish it is,” said Mark Hulbert.

One closely watched sentiment indicator comes from Investors Intelligence, an investment service that measures the mood of more than 100 investment newsletter writers each week.

Investors Intelligence editors Michael Burke and John Gray spied trouble for stocks last fall when more than 60% of newsletters were bullish. The poll as of April 15 showed most of newsletters were bearish and 23.3% belonged to the correction camp, expecting further stock market declines but hopeful that lower prices will spell stock buying opportunities.

The persistent pessimism says to Burke that the stock market is bottoming. “We could be moving pretty much to the upside starting in July or so,” he predicted.

Caution: The stock investing climate is unsettled, and the broad capitulation that generally heralds the end of a stock market downturn hasn’t happened.

Indeed, many portfolio managers are shifting more into stocks. “A lot of people on the equity side are very eager to see the bottom and anxious about missing it,” Bostjancic said. “But it looks to us like the job losses and consumer recession is just in the very early stages.”

The time to be bullish, she added, is when buyers are “anxious that there is no sight to the bottom. But we’re not th