The Bottoming Process

T

tradingbug

This thread is in regards to how many legs we may have left in this bear market and if we are bottoming out.

In order for this thread to work, there has to be a few assumptions. I am assuming we are not seeing a V shaped bottom and will instead see a U shaped bottom.

Take a look at your daily charts of the INDU/SPX between July of 02 to March of 03. This was the U shaped bottoming process of the last recession.

It looks to me that we are starting another leg down that COULD be the right shoulder of an inverted H&S bottom. Similiar to Jan 03. In order for this to be a bottom, we would have to not break through the 666 bottom, turn back up and then proceed to break above the 950 area. The break above 950 would confirm the U bottom and beginning of higher highs and higher lows of a new cyclical bull.

On the other hand, during the great depression, we had a similiar 50% rally only to break the lows and continue making lower lows and lower highs for a prolonged recession/depression.

Fundamentally, I think we are screwed. This would lead me to believe that there is a higher probability of taking out the lows of 666 and continue to make lower lows and lower highs. On the other hand though, I do see the possibility of a U bottom shaping up.

Am I missing anything and what are everyones thoughts?

thanks.

jc
 
Quote from tradingbug:

In order for this to be a bottom, we would have to not break through the 666 bottom, turn back up and then proceed to break above the 950 area. The break above 950 would confirm the U bottom and beginning of higher highs and higher lows of a new cyclical bull.


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the market does not have to fit any pattern. it is very unlikely we see anything close to the lows for years to come. what senario could generate the panic that it took for us to reach those lows?
 
I dont think we are at a bottom just yet. The reason is because there has been no cataclysmic event to mark the exact bottom.

In 1933, you had civil disturbances to the point where American armor units were dispatched through Washington DC. You had record amounts of crime around the United States with policemen regularly carrying around machine guns for protection.

Other market bottoms usually had breakouts of war or acts of terrorism that involved hundreds of Americans dead. Korean War for example. Another two good examples was Gulf War 1 and Gulf War 2.

The 1998 bottom was punctuated by the embassy bombings.

The enemy usually strikes when America is at its weakest or in a recession. Riots and civil disturbances usually occur at that point as well.

My guess is that for a market bottom to occur then there will have to be a major military action or some type of civil disturbance in the United States where National Guard units need to be sent in. Civil disturbances are already taking place in China...

Quote from vhehn:

the market does not have to fit any pattern. it is very unlikely we see anything close to the lows for years to come. what senario could generate the panic that it took for us to reach those lows?
More...
 
Quote from vhehn:

the market does not have to fit any pattern. it is very unlikely we see anything close to the lows for years to come. what senario could generate the panic that it took for us to reach those lows?
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Karl Denniger from http://market-ticker.org/ says that this is a debt driven recession. Not an inventory driven recession.

The only way to get out of a debt driven recession is to write off all the bad debt. He shows that we have a lot more debt that needs to be drained.

Who knows...he could be right...could be wrong.

From top to bottom though, if 666 was the bottom, then this cyclical bear market is shorter in duration than the last one. Seems kind of odd given that our economy is in much worse shape than the 2000 recession.
 
don't look at it, don't think about it, don't talk about it, just go long. Between Goldman Sach, the white house spending and the fed. The markets going up. just don't look down.
:eek:
 
Quote from tradingbug:

Karl Denniger from http://market-ticker.org/ says that this is a debt driven recession. Not an inventory driven recession.

The only way to get out of a debt driven recession is to write off all the bad debt. He shows that we have a lot more debt that needs to be drained.

Who knows...he could be right...could be wrong.

From top to bottom though, if 666 was the bottom, then this cyclical bear market is shorter in duration than the last one. Seems kind of odd given that our economy is in much worse shape than the 2000 recession.
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the market is doing what it always does right now. it is climbing a wall of worry.
 
This global economic complex is now functioning in a progression that is such as to never have been seen before.

The crucial must elements include examining just why the causers of this dilemma cannot, rationally or any other way, contribute to its solution. (See Justin Fox to get up to speed on the causers)

To make money, given this unparalleled opportunity, it is very important to maintain a neutral bias. It is extremely important to use your foundation and rationally build from the comprehensive set of building blocks, the system (structure, process and results capability) that will maintain your proper orientation.

When you are an intimate part of something that is bigger than ever seen before, you must be sure to have ALL the nested fractals on the table. Only a comprehensive paradigm is capable of handling the complex of data that informs the global system.

There will be no anomolies that will mess up the unfolding. However, I do not believe it is possible any longer to depend upon one clearing or IB organization.

You may have started this thread in the worngly monitored forum.
 
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