Discussion in 'Trading' started by Nifty, Apr 3, 2001.
I just have a hunch that we are gonna get to a bottom in the next 5 days?
I think we continue lower. My ratio said that we should have only been slightly negative today, instead we tanked more than expected. Therefore it's underpredicting the moves. If you noticed, it was right about that last major move it predicted right before the fed meeting, that meeting just stalled teh decline by a day. At the time it said 1000 dow pts, and I think we lost a total of 850 from the time I got the reading which is pretty close. It keeps saying just slow moves down. Like today was supposed to be like minus 30-40 max. So if we're going down more than expected, then I would assume it underpredicts for the whole move down. I also haven't gotten any large moves down registered in a while. Instead just these small slow burns. I think that will continue for quite some time.
I think could be close to a bottom area, provided the consumer can continue to hold up his end of the deal. All the reports coming out show that despite losing 3 trillion dollars in market wealth and job layoffs, consumers are still spending and taking on more debt to do it. If however, they stop, or simply can't borrow any more, then we will be in big trouble, and I see Dow 6000 and Nasdaq 980 being a reality. The next couple of months will be crucial. Either way, I don't believe there will be any V bottom, but more of a long, slow base building process from which the market can begin to slowly stair step its way back up. Are we at that point yet? I don't know, but I do know that it is still too early to jump in and buy stocks. Sure, CSCO looks attractive at $15, but didn't they say that when it was 40, 30, and 20? There are lots of great stocks that are cheap now, but it doesn't mean they won't get cheaper still. When the bottom does come, there will be plenty of time to get long.
If you don't mind me asking what type of analysis are you using to predict the magnitude of these waves?????
Is it basic elliot wave or are you applying some other school of thought.
In my opinion my analysis says were close in time to an intermediate term bottom where we can get a decent multi week counter move, but as for price I'll leave that for the birds..... with that said I do not think that the support we have down @ 1,500 will break.
Most serious traders know we are near an intermediate bottom. We are in the zone.
Problem ? retail and institutions do also want a bottom, badly !
So, we don't get any, 'cause everyone expects it. And since all traders know they expect it, it is much easier to sell in their face. As long as the shorting works, why bother go long !
It is so stupid to see all the 'investors' ask for a bottom each day and see them rush to buy on any excuse, desperate to make sure they don't miss the mythical next bull run. They are in for a big disappointment anyway.
Anyway, it is very frustrating to see the market 'slowly' go down like this. I don't mind a bear market, I don't mind a bull market, but the inbetween state we are in for 2 weeks, is not real fun. Unless I daytrade of course. But we are talking about 'bottom' in this thread, so daytrade is irrelevant.
I read an interesting commentary on Linda Bradford Raschke's website about this bear market. Looking at long term charts of previous bear markets we tend to trade in a range at the midpoint of the full downswing and then head lower. Take a look at the charts for the '66, '67-70 and '72-74 bear markets:
And the analysis of our current chart:
As mentioned on the chart captions, there is no way to know where the middle of a bear market is until its over, so who knows what will happen, but the point is that you should be very careful jumping on the "this HAS to be the bottom" bandwagon. Another interesting point that Linda mentions is that in most previous bear markets, the recovery didn't begin until there had been extreme bearish sentiment readings (from Barron's surveys) for several months in a row. We haven't even reached that level yet.
Again, who knows what will happen, but just be careful and let the market tell you what it wants to do, don't try to pick the bottom.
Good trading to everyone,
Wareagle, those charts are excellent. I have been studying everything i can find on past history of bottoms, cause in the markets, history repeats. I don't think csco will be attractive til under 5 or less. It has -30% earnings going forward and almost no book value or cash per share. But im not a fundie, and never profess to really understand that stuff. As for my analysis, I compute a ratio each day. On a scale of 1-50 where 25 if a flat day and 50 is armageddon, today was only like a 39-42 area, and monday was like a 35-37 I think i remember, but these numbers are subjective and just given so that my friends can understand my ratio. A -300 dow day is really much more a 45-47 type move. Basically, the market is moving much more than my ratio predicts, that's why I think we will definately drop considerably more. And I also think we stop at around 6500 and 980 or so. But it doesn't really matter what the real number is cause my ratio will call the bottom most likely a few days before, unless it is a blow off bottom, and I will post when my ratio goes strongly positive for the first time.
As for the market being due for a bounce, I would agree in theory, but I really think that people are too scared. Most of the newer managers have never seen a market like this, and won't know what to do. I really doubt that we bounce much, but instead maybe drift higher a bit if we were to bounce.. but the range idea that wareagle shows really seems most logical as the rsi on teh daily/weekly chart is somewhat oversold.
Tomorrow most likely will be an extension of today im thinking, but I haven't computed my ratio yet, so I won't know.
you're feeling a bottom. Sounds wonderful. Actually, thats an impressively time intuition, prior to thursday.
I too had a short squeeze panic attack. Whenever I have those, has been one of the key turning points the last 12 months.
Had 1 at the top in april (it was a giddiness attack actually), one the first week of Sept (the day the Bear began ) & one wed eve.
From what I learned tho, wed eve is not the bottom, only felt like it.
Wow. How about the timing of that post? I hope you all have achieved some of your goals since we started going higher