The S&P/Case-Shiller index’s 18.6 percent decrease compares with a record 19 percent decline the month before. The gauge has fallen every month since January 2007, and year-over-year records began in 2001. For the first time since the measure started dropping in 2007, the 20-city index didn’t post a record year-over-year decline in February.

Declining prices, Federal Reserve efforts to bring mortgage rates down, and government tax credits for first-time buyers may continue to support sales after an almost four-year slide. Still, mounting unemployment means purchases are unlikely to rebound quickly.

This Bear market stills showing its claws…

The chart shows the S&P 500 since election day (along with the FTSE All-world index, which is deeply influenced by events in the US). It has fallen.

But the pattern is complex. There was a mini-crash in November, triggered by the Treasury’s announcement that it would not, after all, be buying troubled assets from the banks. 

After that, there was a 17 per cent rally that lasted until February 10, when Tim Geithner, the new Treasury secretary, made his much-trailed speech on his plan for the banks. He was not ready to reveal details, dashing many hopes.

Over the next four weeks, the S&P fell a numbing 24 per cent, before staging a rally of 14 per cent this week. It is just above its low from November’s panic.

The latest sell-off was marked by extreme fear. Individual investors, according to one survey, were more pessimistic than they had ever been. From such an extreme it was not difficult to stage a bounce on little substantial news.

Oddly, the tracking poll analogy may be a good one. It is unwise for investors or politicians to pay heed to extreme moves from day to day. But the overall trend should send a clear message – the market has twice panicked when the Treasury has raised its hopes on a policy for the banks and then lowered them. That stocks are barely higher now than in the November panic implies that the new administration has not won the market’s confidence when it comes to the banks and that it needs to do so before stock.

What´s next ?? G20 in London …