How will you determine that the bottom has been reached.
This group is dedicated to the stock market bottom of the
first decade of the present millenium.
Some thoughts on how to determine the bottom include:
1. Bubbles all unwind in similar ways. Watch the comparison between
1929 DJ and 2000 NASDAQ. See: lowrisk.com.
3. It has been suggested that a 5 year low in the stock average combined
with a 15 month lows in short and long term interest rates signals the bottom.
3. Since profits generally disappear during recessions, the price sales ratio
might be a better way to access value in stocks. What is the (P/S) now and
how cheap do stocks get on this basis?
4. Do you look at trading volume as an indicator of interest?
Stocks will continue to drop on low volume if there is no buying.
Will the bottom occur when volume dries up and the price refuses to drop any further?
5. How reliable is the put-call ratio, the Trin Indicator and the VIX as
short term overbought or oversold indicators. While they may give short term
turns in the market, are they useful for predicting the top or bottom of major turns?
6. I like to use the crossing of the daily chart with the 50d and 200d MA
as buy and sell signals. It has been pretty reliable in this past market. -
7. How reliable is the book to bill ratio for semi's. It is said that semi's
are a buy when booking increases 2 months in a row.
These are some of the indicators that I look at. Which do you look at? How soon do you think there will be a bottom (this year, next year or later?)and how will you know it?
Rolatzi |
