Quote from Slave2Market:
My opinion is that I've never seen things so Bearish. Everybody and their dog are talking about a Global Depression and even government officials are confirming that we are in a Recession and that a Depression is a possibility. I have friends and family crying to me about their 401Ks getting decimated. I've been trading since 1985 and I can't ever remember a time when opinions have been so overwhelming Bearish. If you believe in fading the extreme sentiment then being long is the proper trade. Of course, one has to keep in mind that sometimes the prevailing sentiment is correct? I definitely believe that the toughest trade to make here is to go short but it might be the most profitable?
If you go read my post about What Edwards&Magee have written I will quote it here for convenience sake
Quote from IShopAtPublix:
Let me bring up some info from Technical Analysis of Stock Trends by Edwards&Magee 8th edition:
They say that bear markets could often be composed of 3 phases:
Phase I is Distribution when "people in the know" start unloading shares to gullible traders/investors (I don't agree there is anyone ever in the know about absolute tops but let's keep this part for completeness sake)
Phase II is Panic when movement down is accelerated and markets experience ALMOST VERTICAL DROPS. (I believe we are in this phase right now)
Phase III is when stocks continue to persistently go down even on lower volume and people get ever more dejected about the stock market. At the end of phase III everything bad that could have happened has either already happened or being discounted. People don't want to touch stocks with a 10ft pole. Then and only then after people want to forget stocks ever existed can a new bull market begin.
Now they say not all 3 phases are present in every bear market but I believe for this bear market all three phases will be present.
The pundits make it sound like it is a flu shot, just close your eyes and it is over. I think a lot more bad info is to come.
You would know that widespread panic does not mean bear market is over, there could still be prolonged descent on low volume.