Dennis,
Things I'll be looking for either intraday or end of day:
Record volume (or record run rate intraday)
CBOE combined put call ratio of 1.2+, equity only of .90
VIX over 40
Trin of 2.0+
NAZ of 3120 to 3175 maximum; preferably 3000+/- 50 pts
These are tried and true bottom reading for past bottoms in Dec 94, July 96, October 97 and 98. I wouldn't be surprised in this market of excesses, that all time high readings could be in store one of these days soon.
If these conditions exist after the first hour of trading, I may begin committing 1/3 to 1/2 of capital to a few of my favs (BBRC,ATML,LSI, LSCC and CNXT, in that order; CY if I didn't have enough already) at the first sign that the downside velocity has ceased for the moment. Then wait until the end of day to evaluate if any additional purchases ( or sales) should be made.
This margin selling bothers me in that it is somewhat artificial, just as it was on the buyside on the way up, and unmeasurable in its scope and duration. I see anecdotal evidence on Yahoo boards of people getting margin called, then buying back later to get in the same boat. If that practice is widespread this thing could go a ways more I suppose. Gotta believe somebody has the big money to put to work at NAZ 3000.
Of course, something in the action may cause me to chicken out from buying despite the above factors occurring <ggg>.
My non scientific instincts tell me that the round number of NAZ 3000 should hold for a tradeable rally. With all of the overhead resistance in place now, trading must be fast and furious if one is to profit from the long side even if a bottom is hit soon. Should be lots of back and forth and testing of lows. Without the Fed on our side, no V bottom like 1998. |
