I see too many bottom calls, not there yet

Discussion in 'Trading' started by detective, Mar 16, 2008.

  1. We're just not there yet. Not even close to capitulation. A bump over 30 on the VIX in a entrenched bear market is not capitulation. In the media, I am hearing calls of a bottom, from guys like Barton Bigss and other guests on media outlets telling you to buy into bad news, from articles in finance websites to contrarians, who seem to be the majority these days on the web.

    The market doesn't hand bottoms on a silver platter like that. It could happen next week only if we get very heavy selling, but Friday was definitely not it. Lots of volume, but not lots of panic. Need both for a good bottom.
  2. Strath


    You are right in what you are saying. On so many financial news channels and other financial blogs, forums etc all you can see is people saying that we are at a bottom.

    However, news this week will push this market down through this support level so hard that it will be like a knife slicing through butter.

    So what news will do this ?

    a) Bear Sterns actually declaring Bankruptcy during the week. There probably will be lines of people outside Bear Sterns first thing Monday Morning trying to get their money out.

    b) There are plenty of rumours on other boards and on the net in general that in actual fact the whole financial system will close down for 4-10 days just like what happened during the Great Depression. The timing of this could be towards the end of this week just before Easter.

    c) A massive run on all the banks after the 4-10 day bank holiday.

    d) This will first start on the US and it will happen all around the world.

    e) On Friday, the International Monetary Fund gave an emergency warning to all governments right around the world to "Prepare for the Worst".

    Any Fed move on Monday decreasing the Fed rate wont help, in actual fact buyers who buy will be caught in a monumental Bull trap. After them, the market will really tank!
  3. Hello,

    I respectfully suggest that it won't even take a big event for the market to keep dropping - rather it is just the Trend cycle.

    The attached chart is 10 years of Monthly SP500.

    Notice that the "big trend" coincides very much with Fed actions that cause both booms and busts.

    Rates get too low, that fuels bubbles like Dot.com + Housing.

    Then Fed raises rates, credit gets tighter and asset bubble created by fast/loose credit pop.

    This is not new.

    But if historical levels are reached to the downside as they have been to the upside, there could be a LOT more selling.

    On this monthly chart, notice that momentum is just starting to go negative.
  4. Now see this one - same 10 year Monthly S&P 500 index

    There is a bunch of room down below if history repeats - there is a long way to go just to even hit a 50% retracement.

    This is assuming that the housing bubble only turns out 1/2 as bad as the dot.com bubble!!!!

    See this chart for what I am saying . . .

    Do the tops not look very similar?

    What is to keep the bottoms from looking so similar?

    And it appears that the downtrend is just starting.

    I would need to see some actual support before going long.

    Right now, the recent lows are being tested but does anyone really think there is a catalyst to prevent the downtrend from continuing?
  5. Right, we just haven't gotten to levels where people are really disgusted and scared of putting money to work, it seems there are more people afraid of missing the rally back to higher levels. This is of course anectdotal evidence, just as the bulls use anectdotal contrarian evidence such as magazine covers about recession and credit crunch, etc, low bull - bear ratios, etc.

    I mean we just had a 4% rally in one day this past week and then we go down 2% on Friday and that's supposed to be the bottom? People are not really scared yet, perhaps the scariest thing could be the market going down hard on no news.

  6. Bear S will be bought by someone in the next few weeks, they're not a retail bank so they wont have "lines" of people standing our front, thats just rediculous.

    The US banking system wont be shutting down for 4 to 10 days again I don know where you got that stuff from but it sounds like internet fodder just insane.

    on the IMF please post a link from the IMF where they warned the global banking system, again this is silly internet fodder which is baseless.
  7. the amount of bottom calling is amazing. constant interference has prevented stock prices from falling down to meet the reality of whats going on. dow has a min of 1500 pts down before we can say short term bottom
  8. We are in bear market, and bear markets can last 2 years. From an investment point of view, I will not go long unless a new all time high is reached or the 2 years period has passed.

    But the negativity in this thread and this forum says that we may be in a short term bottom. The market did not sell off on Friday. People see the losses and get scared. The market did not even break the low of the previous day for russell 2000 ETF! That is strength to me.

    In addition I have not seen OTM call volalility this high. The market is clearly considering the upside seriously, and for the first time since we came from the top.
  9. paden


    That's a bottom

  10. Fortune telling? How do you know all of this will happen? How do you know Bear Sterns will file for bankruptcy? If so, so what? Does the Western world come to end this week?
    #10     Mar 16, 2008