How Do We Nail the Bottom?

netedge · Oct 28, 2008

Quote from Susannah:

Are you all talking a bottom for years or a bottom for months? I have a hard time taking the "for years" view, but I guess it really doesn't matter, just don't let your grip on whatever you buy get too tight and remain nimble.

It's far too early to say how long this market bottom will hold. My anticipation is that it is for the next few weeks now until proven otherwise. It will take a while for the VIX/volatility to calm down to say if we can truly start a meaningful uptrend.

This could, however, be THE market bottom and so I would look for a calming in the VIX and more market uptrend in the face of continuing bad news. Just remember the market is always looking 6-9 months ahead of the actual news and events so we could begin the start of an uptrend even as companies report more and more bad news and layoffs.

swingtrader · Oct 28, 2008

netedge

My sentiment or actually my equity index trading strategy was very well put by Art Collins. Quoting Art, âThe usual function of bear market rallies is to provide more grist for the downside mill. In other words, Tuesday was an opportunity for a hostile market to trap evermore longs.â His entire comments are at http://elitetrader.com/vb/showthread.php?s=&postid=2149176#post2149176

stock_trad3r · Oct 28, 2008

People thougght the Feb/march 2003 rally was just another dead cat bounce, too.

netedge · Oct 28, 2008

Quote from stock_trad3r:

People thougght the Feb/march 2003 rally was just another dead cat bounce, too.

Good point - retests are critical and this one held against a lot of downward pressure!! That is not a trivial issue.

If there is to be another retest that will probably be a while out from here. Otherwise we go up from here - simple as that.

Possible instruments to play the upside:

SSO (my personal favorite - Ultra S&P long)
EEM (if you think international will snap back even more)

HKIB · Oct 28, 2008

Dow, SP500 and Nasdaq are in the natural rally phase now.

stock_trad3r · Oct 28, 2008

Throw away the charts. The fundamentals point to a huge. Judging by the most important econ indicators things just aren't as bad as the doom and gloom media is making it out to be.

option_trad3r · Oct 29, 2008

Yes, I agree. Fundamental is very good..

Doom and gloom are just lies, don't listen to them. Just buy MOS, AAPL, POT, GS, V, CLF, CLR, GOOG, ISRG, BAC. All going higher soon.

Quote from stock_trad3r:

Throw away the charts. The fundamentals point to a huge. Judging by the most important econ indicators things just aren't as bad as the doom and gloom media is making it out to be.

netedge · Oct 29, 2008

Quote from stock_trad3r:

Throw away the charts. The fundamentals point to a huge. Judging by the most important econ indicators things just aren't as bad as the doom and gloom media is making it out to be.

Fundamentals will make a difference - in the long run. In the short run this market is being driven by emotions. The VIX confirms this if you have any doubts. The economy is headed down before it will level off and begin heading back up.

Nonetheless the markets are way out ahead of the economic news looking for the next plateau. The market recovery will precede the economic recovery. As long as the markets don't exhibit negative gut reactions to the poor economic news the rebound will continue.

Lucrum · Oct 29, 2008

"How Do We Nail the Bottom?"

Whose "bottom" are we trying to "nail"?

netedge · Oct 29, 2008

I am looking at 50% retracement levels in the range of 1076 and 1200 on the S&P. I see these as likely areas of recovery for the bounce assuming we are safely out of the waterfall downtrend at this point.