What the market is saying

Everyone wants to call a bottom.

While there’s obvious attraction in buying as low as you possibly can, few actually succeed.

What trades lower usually trades lower, and what trades higher usually trades higher.

The stock market has a habit of screwing over the most amount of people that it possibly can. That’s why markets ususally bottom when things appear their absolute worst.

Up until last week’s big gain it could easily be argued that things couldn’t get worse.

Bankruptcies and bailouts rattled the entire global economy, the Vix “fear” indicator soared to a multi-year high and even Time Magazine was eluding to a depression with its Great Depression era soup line photo on its cover.

But even though famed value investor Warren Buffet is scooping up bargains, there’s a lot of other folks less smart touting a bottom.

As the ever insightful Barry Ritholtz layed it out in his blog, notorious “dumb money” like Barron’s Gene Epstein making his case for the bottom is something to beware of. Same goes for the CNBC talking heads and various other journalists who only write about, not trade, the market.

The beauty of our time-tested strategy is that we don’t need to rely on the subjective callings of others. We collect solid evidence and make our measured moves from statistically sound methods.

As intermediate term Growth Stock traders three things need to come in place for us to pounce.
1. A Follow Through Day (FTD) indicating institutional players are making bets to the long side.
2. Leadership from top earning stocks moving higher as a group.
3. Well-formed technical bases from which we measure our buy points.

We have our FTD, now we need to see No. 2 and 3 fall in place.

It’s that simple.

Advertisements

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: