My point was that the news is always absolutely the worst at market bottoms, regardless of if we're close to one now or not. Those waiting for 'good news' and better unemployment numbers before a 'real bottom can happen' are IMO confusing a bottom in the stock markets and a bottom in the economy. Big difference.
I'm going long here
- Thread starter Cutten
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No argument, there. Market definitely leads economy.
But for that to be of any use, we'd have to anticipate the cessation of bad news and not necessarily, presume a bottom because things are grim.
Take another chart. The Japanese Nikkei from 1990 until present day.
That thing fell for 10 years as their Government hopelessly tried to save ailing banks. Much like today.
Government intervention just slows and exacerbates decline.
So to assume we'll get a traditional falling knife crash followed by quick rebound, the fundamentals just don't spell that out.
This will be more Nikkei-style than '87 or 74.
Through all these years I find it so interesting that guys are in still in such rush to be the first on their block to buy a ---down----trend. Like, what's the rush? Guess some traders wil never get the risk reward ratio paradigm.... they only see the reward.
There are always counter moves to any strong major trend. So on any given tuesday anyone can buy counter to the minor/major trends and make some money. In fact a trained monkey could do that randomly and be right... sometimes.
But a trader with longevity in his/her future would wait for a classic sign of an interim bottom and a--- change--- in at least the minor trend. Otherwise you are throwing darts looking to catch some v-bottom reversal. You might catch it but is that really good trading...... buying random entry points and then supporting it with statistics/reasons.... like... the market (or stock) is down too far ?
The proverbial falling knife trade!
Means the Fed can basically print money and buy commercial paper, thus unfreezing that market. The CP freeze was really hurting normal sound businesses by blocking liquidity and fund-raising ability, it threatened to cause a really huge bust. Fed is going to buy craploads of it, doing the lender of last resort thing but with the whole of US industry not just the banking sector.
Essentially it means the reason for this whole seize-up and selloff is being addressed head on. Bernanke has written research on this tactic as a way to stop recessions becoming depressions - it's why he is called "Helicopter Ben".