Turn out the lights... - Macleans.ca

Turn out the lights…

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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.