Turn out the lights…

the panic’s over….For a day at least.

But watching the action on the stock market today I was reminded of what a smart trader once told me.He said that if you’re looking to find a market bottom, you look for a day of furious back-and-forth trading, in which the market can’t seem to make up its mind on a direction. (Today certainly fit that description.)

He said you’re looking for a swing of around 500 points on the Dow, between the intraday trough and the intra-day peak. (Today’s swing was just shy of 600 points.)

And he said you want to look for a day that ends on a pretty-strong up tick, with a lot of buyers right near the close. (The Dow was up 410 points today, and about 300 of those points came in the final hour of trading.)

I am not calling a bottom here. I’m just passing this along for the sake of interest. It’ll be interesting to see if this guy’s approach to spotting a bottoming market holds up.  In my gut I don’t believe this is the bottom.  Everyone seems to agree this is the “worst market crisis since the Great Depression”, but the markets have only fallen about 21% from their highs.


Turn out the lights…

  1. Depends on which market – if you’re looking at the commodity stocks, I think they’re far far away from a bottom. Gold has rallied about $100 in the past two days, mainly as a hedge play but it will go south again. And oil failed to hold on to its bounce, meaning it’s going to continue its slide.

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