Another sucker’s rally? Stocks are back in bear territory

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Say hello again to the bear. Did he ever really leave?

Today’s stock market rout left major indexes down more than 20% from their 2007 record highs, which means they’re officially back in bear-market territory.

The more important issue: Key indexes still are above their July lows. If they break through those levels, stock bargain-hunters will realize they’ve been suckered twice -- first by the spring rally, then by the midsummer bounce.

You know the old line: Fool me once, shame on you; fool me twice, shame on me.

The Dow Jones industrial average first crossed the 20%-loss threshold on July 2, when it closed at 11,215.51. That left it down 20.8% from its record closing high of 14,164.53 reached on Oct. 9.

The Dow then slid further, reaching a mid-summer closing low of 10,962.54 on July 15, when -- for the second time this year -- fears of a financial-system meltdown gripped the markets.

After that, stocks fought their way higher in late July and in August, helped by plunging oil prices and hopes that the financial sector had hit bottom. But this week, investors’ mood has darkened again for a host of reasons, which I listed here.

With today’s 344-point, 3% plunge to 11,188.23, the Dow is down 21% from its record high.

The Standard & Poor’s 500 index, which slid 3% to 1,236.83 today, is down 20.9% from its record high, also reached last Oct. 9.

The Dow now is 2.1% above its mid-July low. The S&P 500 has less of a cushion: It’s just 1.8% above its July 15 closing low of 1,214.91.

‘It will be very important for the July lows to hold,’ said Bruce Bittles, investment strategist at brokerage Robert W. Baird & Co. in Milwaukee. New lows, he said, could lead investors to believe that the stock market is foreshadowing something much worse to come in the economy.

One bit of good news: As a group, financial stocks remain significantly above their July lows. The S&P 500 financial-stock index, which dived 4.7% to 280.89 today, still is 21% above its July 15 nadir.