Well, I'll take the easy way out and say, I don't know. However, I'll give you what I'm pondering now.
Short term, we could have a worthwhile intermediate bottom at the end of this week or sometime next week. That depends on whether we continue to go down this week. It would have been a sure thing if we hadn't had the bogus blip up last week.
However, I have two problems now. The first is bubbles. The housing price bubble has been partially popped--I expect more to go. As ugly as today was, we may have seen the worst of the financial bubble blowup. That leaves us with the commodity bubble. You can do a quick check by looking at the differences between the NYSE move vs. the INDU move. Normally, they will be fairly close. However, when the NYSE is much lower than the INDU, you can assume that commodities are being hammered. Eventually, the dollar will turn up and make things worse. Take a look at the NYSE vs. INDU today. Now, ask yourself whether all markets will go up if the NYSE is going down due the the bursting of the commodity bubble.
The second is the chart you posted earlier today. Let's assume that there is an inverted head and shoulders in the middle of that pattern. Patterns like that and triangles like to retest their apex or neck. Now, let's assume that there is such a thing as a bear market. If so, we are in the second leg down using Dow Theory. (Forget Russell.) Now, look at your chart and you will notice a lot of crap at the 11,000 level prior to the inverted head. That could be the end of the second leg down. The neck is somewhere around 10,500. That could be the bottom before you get Edson Gould's "sign of the bull." If you go back to October 2002, to March 2003, I think, you will see it.
That's just what I'm pondering.
Anyway, I'll trade the long side for change when I see an intermediate bottom, and keep 10,500 in mind--just in case. I have only one stock that I am keeping for any period of time. |
