9 Reasons Why We Are Close to, If Not Past, the Bottom

Discussion in 'Trading' started by Jahajee, Sep 28, 2008.

  1. 9 Reasons Why We Are Close to, If Not Past, the Bottom
    by: Alan Brochstein posted on: September 28, 2008 | about stocks: CFR / GS Font Size: PrintEmail As many readers recall, I was INCREDIBLY bearish beginning in the summer of 2007 after nervously watching what was being seemingly ignored but was increasingly playing out to be the disaster scenario we hear about ad nauseum now. I continually reiterated my concerns for the next several months despite the uptick in the market.

    One of my favorites, that I originally titled "Time to Build an Ark", was changed by the editorial staff of Seeking Alpha to "It's October - Should We be Buying?, in which I projected an 1150 S&P 500 right about now. I typically tend to be early (yes, I lost money shorting internet stocks in late 1999), and I walked away in May from my earlier predictions that the Bear Market would end in the Fall.

    I have contended (and still do) that money can be made on the long side, but it has been tough. I believe though that it will soon be a lot easier. I am no Pollyanna - we are indeed facing economic challenges of epic proportions - and not just our country. I want to share some observations and data that I believe support that there is enough blood in the streets and a high enough awareness of the problems (and a pathway to their solutions, which will still take considerable time).

    Love him or despise him (I actually do both, but that's a different story), Jim Cramer, the pundit for the masses (and the pros, who would never admit it!), is one to watch. Just like his berserk Bernanke beseechment a year ago (he was right to worry, but he didn't have the right solution), Mr. Cramer is a bit EMOTIONAL right now. He continues to advise everyone to sell, sell, sell. "It's time to be defensive." It's not just him - it's everyone!

    My clients, my friends and family, the media - almost everyone that I encounter is petrified. Where were all these folks a year ago? It seems to me that when almost everyone is negative, it's probably not a great time to "sell, sell, sell".

    So, what am I seeing that gives me some confidence that we are close to if not just past a bottom? Here is my list, in no special order (except the best for last):

    It's that time of the year
    We got the spike in VIX
    Credit Spreads reflect dire pessimism
    Put/Call and sentiment ratios reflect dire pessimism
    We have a "confirmed rally" according to IBD
    Market strength in early recovery sectors
    Valuations are extremely low
    Rates are likely to stay low
    ***The right solutions are in the public domain now

  2. you forgot one

    blackguards 7 says we hit bottom on September 18th.
  3. stop calling bottoms
    bottom in 1-10 years
  4. We have not had the recession yet, stop rushing things!!
  5. AK100


    A lot of people calling for the bottom.

    Most of them have hidden agendas, ie lower markets are not good for business...........
  6. My agenda is to make money. Discuss the markets.
    Not hidden.
  7. Federally speaking, it is virtually illegal for markets (let's not mention currency) to lose value.
    Based on "the bailout" being passed, a tradable bottom is in.

    "A" bottom is not "THE" bottom.
  8. ya i went long friday morning
    will sell and fade the market whenever it loses strength. i'm going to guess within a day or two.
  9. bgp


    bottom ????? of course we hit a bottom ! until the next one comes along in a short time.:)