What type of bottom will we see?
One more day. That's all I wanted. I was hoping for one more up day in the S&P 500 to step aside. Now because of the one to two day delay, I don't know how wise it would be to get out now. A whipsaw would be a definite possibility. (Buying stocks just before prices fall and selling stocks just before prices rise in a volatile market).
Regardless of what happens, I'm counting on a short term bottom being close at hand based on the short term indicators. The question will remain as to where we will see the intermediate and longer term bottoms. For now let's look at the type of short term bottoms we can expect. Here is a two year chart of the S&P 500.
Chart provided courtesy of
www.decisionpoint.com
Points marked "A" can be trouble. These are lows that are tested and the old low does not hold producing a lower low.
Points marked "B" occur when the prior low is tested and holds. You get a small rally and a pullback to the prior low before a rally begins.
Points "C" are the classic "V" bottoms. These are tough to time as the market can run away from you as you wait for the retest (A, B) that never happens.
Again those are short term bottoms. What we need to know is if the intermediate term, that 4 to 8 week bottom I have been looking for, will occur. Meaning, will we see another move down to these levels in November or December, as we saw repeatedly in 2004 and 2005? My thinking is yes, because while the psychology leg of the market looks good in the short term, the longer term psychology indicators still need a little work.
We had a mixed bag of earnings reports last night. Some strong and some questionable. That should shake things up again today. I am expecting more volatility as we saw in 1994 (you knew I couldn't go more than a couple of days without this chart). I just don't know if we are at the first dip in the box, or near the last. The current market looks similar to the last but time-wise we are closer to the first.
Chart provided courtesy of www.decisionpoint.com
The I fund is causing some havoc but with it down nearly 5% in just over two weeks, it too is due for a bounce.
Rereading my comments I sound like a nervous, uncertain trader. That's because I am a nervous, uncertain trader. But my experience tells me that my nervousness is a good thing. Remember, it is better to buy fear and sell over confidence. Fear comes closer to the bottom than the top.
The short term looks pretty tricky. I think I will have to stay invested and deal with any more downside pain with the rest of the bulls. This is not the situation I wanted to be in and if we were able to move in or out of our funds at any time during the day being effective immediately, I would likely be playing things differently. But we have to play the cards we are dealt. Here's to a worst case scenario "B" bottom.
That's all for today. Currently 40% C, 30% S and 30% I fund. Thanks for reading.
One more day. That's all I wanted. I was hoping for one more up day in the S&P 500 to step aside. Now because of the one to two day delay, I don't know how wise it would be to get out now. A whipsaw would be a definite possibility. (Buying stocks just before prices fall and selling stocks just before prices rise in a volatile market).
Regardless of what happens, I'm counting on a short term bottom being close at hand based on the short term indicators. The question will remain as to where we will see the intermediate and longer term bottoms. For now let's look at the type of short term bottoms we can expect. Here is a two year chart of the S&P 500.
Chart provided courtesy of
www.decisionpoint.comPoints marked "A" can be trouble. These are lows that are tested and the old low does not hold producing a lower low.
Points marked "B" occur when the prior low is tested and holds. You get a small rally and a pullback to the prior low before a rally begins.
Points "C" are the classic "V" bottoms. These are tough to time as the market can run away from you as you wait for the retest (A, B) that never happens.
Again those are short term bottoms. What we need to know is if the intermediate term, that 4 to 8 week bottom I have been looking for, will occur. Meaning, will we see another move down to these levels in November or December, as we saw repeatedly in 2004 and 2005? My thinking is yes, because while the psychology leg of the market looks good in the short term, the longer term psychology indicators still need a little work.
We had a mixed bag of earnings reports last night. Some strong and some questionable. That should shake things up again today. I am expecting more volatility as we saw in 1994 (you knew I couldn't go more than a couple of days without this chart). I just don't know if we are at the first dip in the box, or near the last. The current market looks similar to the last but time-wise we are closer to the first.
Chart provided courtesy of www.decisionpoint.com
The I fund is causing some havoc but with it down nearly 5% in just over two weeks, it too is due for a bounce.
Rereading my comments I sound like a nervous, uncertain trader. That's because I am a nervous, uncertain trader. But my experience tells me that my nervousness is a good thing. Remember, it is better to buy fear and sell over confidence. Fear comes closer to the bottom than the top.
The short term looks pretty tricky. I think I will have to stay invested and deal with any more downside pain with the rest of the bulls. This is not the situation I wanted to be in and if we were able to move in or out of our funds at any time during the day being effective immediately, I would likely be playing things differently. But we have to play the cards we are dealt. Here's to a worst case scenario "B" bottom.
That's all for today. Currently 40% C, 30% S and 30% I fund. Thanks for reading.
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