How Do We Nail the Bottom?

Quote from netedge:

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.
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My calculation says that 1000 is the first resistance level and 1215 is the second resistance level.
 
A seasoned reporter Andrew Mickey gives his assessment of how you find a market bottom. He says we've hit 4 of the 5 goals needed to mark the bottom:

1. Signs of a Market Bottom: The VIX sets new highs

2. Signs of a Market Bottom: Weak Hands Walk Away

3. Signs of a Market Bottom: Closed-End Fund Indicator

4. Signs of a Market Bottom: Perma-Bears Turn Bullish

5. Signs of a Market Bottom: Bad News Isn’t So Bad


Read the rest of the article to find out the specifics of where we currently stand on each of these 5 variables and why. It's very good:

http://seekingalpha.com/article/102632-five-signs-of-a-market-bottom
 
Another up day. We should end the session up 4% or more when the fed cuts. All that matters is that he cuts. ignore all the hemming and hawing about 'slowdown' and 'recovery'. He has a tendency to talk too much, which sometimes spooks the market.

Dow 10K this week easily. The 'v' shaped recovery is real. The fed will not let this market fail for very long, and will inject as much money as needed. This is just like may 03 again.
 
No this isn't the bottom and a turn. This is the ebb and flow of fear and greed in a bear market. When fear momentarily subsides greed rushes back in in the form of knife catchers who think they are going to miss out. We are in a bear market and we will remain in a bear market until there is some signs earnings will be improving. If you haven't seen one before It is a bear market rally. Bear market rallies are fast and steep.
The fundamentals of companies are just starting their downswing.
The economy is also starting its down swing into recession.
Last recession the economy bottomed in 2001. Stocks did not find their final bottom until 2003.

Bottoms are formed over a period of TIME, not just a dow price.
The market may or may not take out the prior lows. The market can wallow around right here for months. When that comes to an end 3-6-12? months from now that will be the bottom whether we take out the lows or not.

also aside from deteriorating corporate and economic fundamentals we still have a global financial crisis to work through. Also a housing depression which shows no signs of ending and a consumer which accounts for 70% of GDP getting squeezed harder and harder every day. The auto industry also sucks and isn't going to snap back anytime soon. What happens to the market when/if GM or another financial fails? You think that's not going to happen and everything is honkey dory because the gov is bailing everyone out? The fact that the gov't has to bail everyone out alone should indicate that things are not so good. How about a foreign country like Ukraine, Hungary, Venezuela collapsing? It can happen. And it won't be good for global markets.

So with all those dangerous uncertainties there is No rush to load the boat. Let the greedy stupid knife catchers be the bag holder. There is plenty of time before a Bull market returns. We are in a bear market.
Trade it accordingly and let others catch the falling knife and holding the bag.
No need to buy now and have those stocks dead money just sitting there and likely going lower when you can buy on the way up later.
Depending on how deep and how long this recession drags on....perhaps we bottom next october.
You think that can't happen?
Then you and many others are seriously deluding yourselves or have little understanding of market and economic dynamics. I am not saying that will specifically be the case. I am saying we are in a bear market and we will be in a bear market tomorrow. Enjoy the bear rallies and selloffs.

So in response to your initial question.
HOW DO WE NAIL THE BOTTOM?
The way is to watch and wait patiently for signs of a turn around in the fundamentals of companies and the economy. You wait safely and buy on the way up.

That's the smart way to do it.
Happy Trades!


Quote from netedge:

The Dow gained a massive 11% in Tuesday's trading session. Is this the bottom and the turn? Wilbur Ross, Chairman & CEO of WL Ross & Co. shares his views with CNBC's Martin Soong, Amanda Drury and Sri Jegarajah.

Watch the following video to get the report:

http://www.cnbc.com/id/15840232?video=908954172&play=1
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Another day of ass pounding for shorts and the fed didn't even cut yet. Another 10% rally today, but 5% will be good enough. That will be total of 1200 dow points for the week.
 
Quote from 1flyfisher:

No this isn't the bottom and a turn...
The economy is also starting its down swing into recession.
Last recession the economy bottomed in 2001. Stocks did not find their final bottom until 2003.

So in response to your initial question.
HOW DO WE NAIL THE BOTTOM?
The way is to watch and wait patiently for signs of a turn around in the fundamentals of companies and the economy. You wait safely and buy on the way up.

That's the smart way to do it.
Happy Trades!
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Flyfisher, I appreciate your measured response. We don't want any irrational exhuberence at this point do we :p

However, I also want to point out a couple of key elements to your comments:

-The markets act ahead of the news - not in tandem with it. These markets will anticipate the turnaround before it actually has happened in corporate Americal

-Also am wondering where you get your statistics? The market bottom from the last bear market was in October 2002 - not 2003. It was followed by a failed retest in 2003 that did not penetrate the bottom or reach it. The VIX also retested its high in July of '02 and we did not penetrate that number until this month.

-Finally, by looking for the market "bottom" does not necessarily coincide with the declaration of the beginning of the next bull market. It simply means we are trying to identify a safe entry point where the equity markets can be purchased with minimal risk.

I think the one thing that may make this bear market unique among others is the global participation. Will that speed up the process or slow it down? Only time will tell. But if you wait for the economic recovery in corporate America you will miss a good deal of the rebound!
 
So far all the econ data and earnings reports have been better than expected or inline. And credit situation is improving. What does this tell you? So much for a deep recession.
 
Quote from netedge:

Flyfisher, I appreciate your measured response. We don't want any irrational exhuberence at this point do we :p

LOL irrational exuberence

However, I also want to point out a couple of key elements to your comments:

-The markets act ahead of the news - not in tandem with it. These markets will anticipate the turnaround before it actually has happened in corporate Americal
yes I am quite aware of that. However in 2001 the economy bottomed and the markets did not bottom until 2003. So in general yes the markets will anticipate the light at the end of the tunnel and reverse course but that is not etched in stone. I do however believe that this market will reverse in advance. I guess my main view is that there is no light at the end of the tunnel and that things are likely to get worse. I left out increasing unemplyment in my above post. So I don't not see any reason for the market to reverse course and go into a bull market. There must be a catalyst for that to happen and things are going in the opposite direction as far as economic and corporate fundamentals.

-Also am wondering where you get your statistics? The market bottom from the last bear market was in October 2002 - not 2003. It was followed by a failed retest in 2003 that did not penetrate the bottom or reach it.
That retest was the generally accepted and recognized market bottom in 2003. As I pointed out a market bottom isn't alone the lowest price point on the s&p or dow. Bottoms are formed over a period of time. The VIX also retested its high in July of '02 and we did not penetrate that number until this month.
personally I don't not see the vix as an accurate market barometer under the current market conditions we have as far as volatility. We are setting new market parameters for volatility

-Finally, by looking for the market "bottom" does not necessarily coincide with the declaration of the beginning of the next bull market. It simply means we are trying to identify a safe entry point where the equity markets can be purchased with minimal risk.
well if that's your criteria than I would say unequivocally we are not at a market bottom. There is much to much uncertainty and risk for further market erosion. also if we are to consider the time value of money here? Is buying a stock now at $30 a wise move if the stock will wallow away along with the markets for another 6-8-12 months? Hypothetically speaking of course.

I think the one thing that may make this bear market unique among others is the global participation. Will that speed up the process or slow it down? Only time will tell. But if you wait for the economic recovery in corporate America you will miss a good deal of the rebound! only fools rush in. I can wait patiently and sacrifice a small amount of profit for safety. That's what Benjamin Graham teaches us as to how to wisely value invest in company turn around plays or when markets are in a bear. you don't try and pick the bottom. you wait and watch for signs of recovery and then buy. If a stock was at $90 and goes to $30 I am quite happy to do what Graham has taught me and to make my entry at $45 for a run to $105.
FEW will pick the EXACT bottom.
And it isn't necessary.
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