Well it ain’t pretty.

As the broader market struggles to catch a bid, the majority of sectors are finding new multi-year lows, or coming close.

The S&P 500 is down about 45% from its peak a year ago.

This clearly is worse than the sell-off of the 73-75 bear market, which lost a little over 43% in two years.

The S&P 500 is trading at about nine times forward earnings. At the bottom of the 73-75 bear market valuation was about seven times earnings. But forward earnings are based on analyst predictions for 2009. Analysts polled by Thomson are predicting growth for next year, but the reality may very well be declines in earnings.

In other words, even as earning forecasts show good prices at historical bargains, the reality is they’re probably cheaper if earnings deterioration occurs next year. Given stocks’ tendency to be an indicator of future earnings, the viscious selling this year seems to be telling us the earnings growth outlook is about as bad as ever. Recession time.

The next technical support level for the S&P 500 is about 750, which was the low the last bear market in 2003.

But week to week price action in the broader market doesn’t adhere to fundamental logic.

We pretty much expect the market to do what most don’t expect it to.

Our volume indications, with Follow Through Days (FTD’s) in place from two weeks ago on the Dow and S&P 500, suggest we could see a rally form.

Should we get that rally, we’ll look for two things to fall in place:

1. Leadership from top earning stocks moving higher as a group.

2. Well-formed technical bases from which we measure our buy points.

Results from our scan for top earning stocks shows us a glimpse of hope as we actually have some candidates with a rally potential – as illustrated for paid subscribers.