How Do We Nail the Bottom?
- Thread starter netedge
- Start date
Bottoms are temporary and absolute. Is it possible to say that the 816.75 to 825.00 range on the ES is a temporary bottom? If so, then this conclusion implies a bear rally? We have yet to see any follow-through after the "bottom reversals." If the above range is temporary, then this implies that there is probably a lower--either temporary or absolute--bottom range to be seen. As history shows, an L type bottom is healthier than a V. If so, then the market will consistently stay within a range until it breaks upward with tremendous volume. It is at this point that some "real" money enters. Once it breaks the 200-day MA, then the mutuals and other institutional money enters. Simply, history repeats itself. There is no way to predict a bottom until it is reached, repeated several times over months and possibly years, and then finally breaks above the range with tremendous volume. Lastly, look at the fundamentals. We will not see anything until the consumer comes back into the picture. This won't happen until everyone has a job and the housing market comes back. Lots of other bad fundamentals. We need concrete good news, not empty promises.
Now, what would happen if you bought 100 shares of the SPY every time the market hit a new low. You may run out of investment capital, for one. At least your averaging down will lower your basis. And if by some chance the market recovers by the time you die, at least your loved ones with enjoy the fruits of your labor. Point being, no one on the planet knows where the bottom is. No one knows the range, and no one knows when the break out will occur. Trading and buy and hold as we know it has changed or died.
Now, what would happen if you bought 100 shares of the SPY every time the market hit a new low. You may run out of investment capital, for one. At least your averaging down will lower your basis. And if by some chance the market recovers by the time you die, at least your loved ones with enjoy the fruits of your labor. Point being, no one on the planet knows where the bottom is. No one knows the range, and no one knows when the break out will occur. Trading and buy and hold as we know it has changed or died.
I agree that consumption has to increase before the market will begin to move - however, consumers are not the only ones that consume. So do governments. Governments can actually pursue unlimited consumption (by printing money) as long as they do not mind debasing cash and destroying the savings of those who have saved. Lately, I have not heard anything from governments about maintaining strong currencies, so I am thinking that they have no problem destroying savings (by printing money and lowering interest rates), so that they can save those who borrowed and spent recklessly (this includes the governments themselves who like to throw money away on cronies and endless wars). My money is on asset inflation - yet again, with controls on leveraging.
===========Quote from netedge:
Here are some things.....:
1) The average move in 12 months from the last 10 bear markets since 1929 is up 55% - not a bad 12 month return
2) The average distance from the top to the bottom of those 10 bear markets is exactly 49%. The low we put in on Thursday is 48% from the top of October 2007. Coincidence?? You decide.
3) There were 2 retests of the approximate low in the 2002/03 bottoming area of that bear market. Again - sound familiar??
Thaks netE;
I am fairly optimistic but bearsih also, especially Nasdaqqq,SPY
Mentioned retests of monthly highs are quite common in bears .;
this bear is trending better than that, not many retests of monthly highs since JULY.
A more agressive definition of a bear market[than 200dma] is a 20% drop starts one;that called it right on NasdaQQQ, bear 2000-2003 Using that;
it retested /made new monthly lows about 12 times/multi years.
And the way i am counting retests, the 4 different week s of oct 2008 retests would only be one monthly retest.
So a 12 different month /multiyear lows retest could easly be many times that on daily charts, weekly charts.
Actually i respectfully disagree with your somewhat bullish only ''2 retests of approximate lows''in 2002,2003;
but you may be right
Sure ,we are reading it now from right, to left to get ''the hindsight bottom'' 2 retests. And Nice 1929 comp.
One thing is clear from current market action. The wave of hedge fund and mutual fund selling has temporarily ended, and the only selling is coming from the shorts themselves. And the shorts were beaten back and overwhelmed on Thursday as they crept to close to the edge of the unknown. You have to be a very brave short to venture near the current market lows, where elephants lurk and are ready to trample. For now, I am accumulating alongside the elephants and welcome any shorts who dare to tempt the current lows. Who out there is brave enough? 
IF GM and or other BIG names go Chapter 7,11 we have not hit bottom. I know Cramer said this too, so now I'm doubting myself a bit. But those job losses and the shock and awe of several huge negative "surprises" yet to come will push us lower. I expect a somewhat extended holiday bounce but then..?..
I'm also hearing more about professionals begging/strongly advising their 401 customers left in equities to "at least" wait for the holiday bounce before pulling out in anticipation of 2009 being a terrible year. So a possible climb for ES to 1000-1050 and be prepared to dump again.
I'm going to trade as it is, not on hope or fear. Admittedly though, this is much easier said then done.
I'm also hearing more about professionals begging/strongly advising their 401 customers left in equities to "at least" wait for the holiday bounce before pulling out in anticipation of 2009 being a terrible year. So a possible climb for ES to 1000-1050 and be prepared to dump again.
I'm going to trade as it is, not on hope or fear. Admittedly though, this is much easier said then done.
i agree with u ,but am starting to doubt the 1000 mark,seems to be less buyers on shorter,quicker rallies,i was looking for 1100 on a 36% bounce off of the 800 and change area,to mimick 1929,i think we'll rally into exp this week and then down thru dec and continue lower for a few years. These huge price swings are mimicking 1929 ,I wasn't around and charts are only historical,so I'll leave bravery for the story books and go home mostly flat.With 8 or 900 point dow swings intraday,who needs a position.
This crisis and thr 1929 crisis are very similar in that they were brought on by an incredible amount leveraged debt that was encouraged by unregulated scamming of financial institutions. The BIG difference between the two scenarios, is that while the Hoover administration choked money supply and thus brought on the great bank fiasco of the Great Depression, Bernanke has done the exact opposite. He has been flooding the money supply by borrowing and printing.
This crisis will go its own way. It is not deflationary like the 1930s nor is it inflationary like the 1970s. It is its own mess. The market has certainly discounted all known problems, and more. The SP 500 has not become the SP small cap index. The question is whether the Obama administration can stop the hemmoraging of the housing market, which is where this all began. My guess is yes. He will divert funds from Wall Street bonuses and bank dividends, to mitigating housing foreclosures (as Sheila Blair is begging Paulson to do), thereby stopping the downward spiral, and begin a period of first flattening growth followed by limited growth, which should send the Dow up 50% or more over the next two years.
As for GM, there is no news here. Bankruptcy is totally discounted. The question is whether retired workers will foot the bill via reduced pensions and benefits, if they go into Chapter 11, or the taxpayer will, if they don't. There is something to say for both approaches. One thing Obama doesn't want is to increase the number of foreclosures, which will put greater pressure on the banking system. In any case, my rule of thumb is that when the government starts pumping the system full of money, go with the flow.
Rich
This crisis will go its own way. It is not deflationary like the 1930s nor is it inflationary like the 1970s. It is its own mess. The market has certainly discounted all known problems, and more. The SP 500 has not become the SP small cap index. The question is whether the Obama administration can stop the hemmoraging of the housing market, which is where this all began. My guess is yes. He will divert funds from Wall Street bonuses and bank dividends, to mitigating housing foreclosures (as Sheila Blair is begging Paulson to do), thereby stopping the downward spiral, and begin a period of first flattening growth followed by limited growth, which should send the Dow up 50% or more over the next two years.
As for GM, there is no news here. Bankruptcy is totally discounted. The question is whether retired workers will foot the bill via reduced pensions and benefits, if they go into Chapter 11, or the taxpayer will, if they don't. There is something to say for both approaches. One thing Obama doesn't want is to increase the number of foreclosures, which will put greater pressure on the banking system. In any case, my rule of thumb is that when the government starts pumping the system full of money, go with the flow.
Rich
we should have another 1000 point rally soon
Why because you know how stocks and the economy work? Good thing your full of shit about actually owning the stocks in your index, becuase BIDU would have violated you painfully today. You are such a punk