NEW YORK (MarketWatch) -- With few technical or fundamental road signs left, two equity strategists have devised a top 10 list for investors searching for signs of a bottom -- not to be confused with a bear-market rally.At turns both serious and tongue-in-cheek, BNY ConvergEx Group analysts Nicholas Colas and Oren Klachkin offer the following as their top 10 signs of a market bottom:
1.A significant (more than 10%) one- or two-day drop in the market. The current orderly decline, while severe, is largely running in line with the deteriorating U.S. economy, said Colas and Klachkin. Therefore, an even sharper drop would position stocks as cheap, relative to fundamentals -- "perhaps even cheap enough to make a bottom," the analysts said.
2. Timothy Geithner is replaced with Paul Volcker. Fairly or not, the market does not have a lot of confidence in Treasury Secretary Geithner, while former Federal Reserve Chairman Volcker's "proven abilities in a crisis could play better with investors," the analysts said. Volcker currently heads the Economic Recovery Advisory Board under President Barack Obama.
3. The 100th day of a bankruptcy by General Motors Corp. The first few weeks of a Chapter 11 filing by the automobile maker would likely be chaotic, given the industry's linkage with so many parts of the economy. "After the initial problems, though, the market may have finally discounted the structural challenges of the U.S. economy," said Colas and Klachkin.
4.Gold at $2,000 an ounce. "Gold is the ultimate capital-markets panic play. A quick double in the metal would be a strong contrarian indicator that it was time to buy stocks," the analysts said. "I'm not sure I want to live in a world where gold is $2,000 an ounce. It would mean something is tremendously wrong. From an equity standpoint, the best thing you can say about gold right now is that it hasn't broken out to record highs even in the face of uncertainty," Colas said in an interview with MarketWatch. Read Metals Stocks.
5. The Dow Jones Industrial Average changes more than two names at the same time, and/or adds names to increase the overall number of stocks in the index. "There are some 'zombie stocks' in the index , to borrow a popular phrase. The Dow is price-weighted, so small-priced stocks are almost irrelevant to the performance of the index. By the time the senior editors of Dow Jones recognize they need to change some names in the index, it may be time to [reconsider] the market as a whole."
6. New York Stock Exchange daily volume drops to 1 billion shares for 30 sessions in a row. "Sometimes you just need everyone to give up to make a bottom," the analysts reasoned.
7.One million jobs lost in a month. Such a bad number could indicate a bottom, given the lagging nature of the employment count.
8. The market starts to rally on bad news. "In prior cycles, bad news turned into good market performance when it showed that [the] Fed had the economic reason to cut interest rates. In this market, the Fed is out of bullets, so bad news is bad. When the market can rally on bad news, it is a great sign that valuations finally reflect the current environment," the analysts said.
9. Stock market favorites see 15% to 20% declines. When standout companies -- such as Wal-Mart Stores Inc. and McDonald's Corp.-- "get clobbered" you'll know a bottom is near, they said.
10. CNBC goes off the air. "The entire financial community has a love/hate relationship with the box in the corner of every trading room that is permanently turned to the network. The only certain bottom would be when so few people care that the network has to close." Read Jon Friedman's commentary on Jon Stewart's CNBC skewering.
On Monday, Geithner remained Treasury secretary, GM was still a going concern, and CNBC remained on the air. Stocks finished solidly lower after meandering between gains and losses, with energy stocks leading the gains and telecommunication services pacing the declines.
"People continue to be in panic-driven liquidation mode. These markets haven't been so oversold since tomorrow," said Art Hogan, chief market strategist at Jefferies & Co.
The Dow industrials fell 79.89 points, or 1.2%, to 6,547.05. The S&P 500 dropped 6.85 points, or 1%, to 676.53, and the Nasdaq Composite declined 25.21 points, or 2%, to 1,268.64, its lowest close since October 2002. See stock-market report.
Kate Gibson is a reporter for MarketWatch, based in New York.