ET Official Bottom Watch Thread

Quote from lindq:

Personally, I've always been fond of bottom-watching.

I've often wondered, in fact, over a lifetime how many bottoms most of us watch. Or at least glance at. When we can get away with it.
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Seriously, I was just in colombia for a week. Those people know their bottoms, we should ask them.


Maybe one of those brazilian guys can shed some light where the sun dont shine?
 
After Nixon's resignation in early August of 1974, the Dow began another terrible decline which slaughtered the remaining Bulls. Over the next two months the Dow would drop from 797 to 584 in early October for a loss of 27%. During the plunge, the Dow was hit with a losing streak of 11 straight sessions for a 13% total loss. After hitting bottom, the Dow shot up 16% to 675 in early November, but those gains were quickly lost as the Bulls finally capitulated in despair. The Dow fell to a new low of 577 by early December which was to mark its final bottom in the 1966-1982 secular bear market. The Dow's close of 577 (45% off of its peak) was its lowest level since October of 1962 and sentiment at this bottom was absolutely grim. The same major publications that cheered the Dow at 1000 two years ago were now overwhelmingly pessimistic. Articles such as "Dow below 400?" from Forbes and "Is there no bottom?" from Newsweek were typical of the period. As the Dow began to rally off of its second drop below 600, it became apparent that the selling over the past couple of years had finally played itself out. The Dow was trading at 25% below its 200 DMA and the subsequent rally was so strong that it managed to get back to its 200 DMA in just two months with a close of 717 by February of 1975. The recession which began in late 1973 officially ended in March and the Fed was now easing interest rates. By May, the Dow was trading at 855 for an astounding gain of 48% off of its lows from just five months ago.

http://www.fiendbear.com/bear1973.htm


Does this sound familiar? look for a big rally that ultimately fails.
 
Quote from stevegee58:

Do a scan for stocks with a P/E < 10.
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I just read an analyst firm's explanation of their buy recommendation on DRYS. The stock is trading at a P/E of 1. They just announced new acquisition of additional fleet as well as additional drillships. If they liquidated ONLY their drillships now, the resulting cash would equate to $30/share. They are trading below $20/share.

FWLT (P/E of 8) has a backlog greater than its market cap. They have reassured investors that even if oil were to drop to $65 a barrel it would have no bearing on their continuous profit growth. They are trading at 2-year lows despite having tripled their earnings since then.

These examples bring to mind the famous quote:

"The market can remain irrational longer than you can remain solvent." - John Maynard Keyes
 
This is strange but the the ISEE sentiment index is still quite high for this to be a bottom. Too many people are anticipating each day to be the bottom and the turn around.

The ISEE hit the 50's and 60's intraday around the week of Sept 15-19. Today, it's still in the 100's.

So I do think we have little down room to go - perhaps sub 8000 Dow intraday low one of these days then a big bounce?
 
Here is a finviz screen for the following:

Average volume > 1M
Price > $15
P/E < 10
EPS growth this year > 0
EPS growth next year > 0


It produces a nice list of 149 stocks. That's pretty small out of 10's of thousands of stocks.

DRYS (mentioned earlier) isn't in the list because next year's EPS growth is negative.

A bottom will form some time. When it does, it's companies like these that will lead the way.
 
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