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Are we FINALLY at a bottom or is this just a head fake?
Answers
474 points
spider348 answered one year ago …
I don't think it was a head fake - too much volume on that rise. I am not letting the lackluster action today stir me too much. The rate cut was priced in way back and the sell off at close might have been heavy sell imbalances (which means bears still lurk).
However on a broader scale, the daily and weekly RSI for symbols DIA, SPY, QQQQ are now at levels not seen since Sept and MACD's are showing bullish crossing deep in oversold territory. So maybe we are slowly digging out. Personally I like the high created by Tuesday's run as a pivot to watch.
457 points
SallyG answered one year ago …
I don't think anyone can really tell if there is a bottom until well after it has been passed. Currently, I am considering purchases of good companies with single-digit P/Es, and holidng onto my good companies whose P/Es have stayed in the 15- to 20- range (where I usually buy). I invest long term, so "cheap" is more important to me than "absolute bottom".
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2183 points
ChaosNantuko answered one year ago …
Answering a bit late, but heres my take on things right now.
Its hard to tell if we've hit bottom yet. chart-wise, the SPY has been moving sideways since the big drop about a month ago, albeit in a voatile way. This may be a sign that there are some buyers in the market. On the other hand, the high volatility signifies to me that the market just lacks direction, and could go either way. The most important key points on the SPY index to watch are 108, and 83. If it goes above 108, i'd start considering a bottom plausible. If it goes below 83, i'd assume the bear will continue. If you REALLY wanna be cautious (not at all a bad idea when taking bullish positions in a current bear market), wait till the SPY crosses above the 200 day moving average before buying. You won't get in at the bottom. In fact, you'll probably miss the first 15-20% upwards, but a crossover above the 200 day moving average is a very strong signal that the bear is dead.
Based on fundamentals/sentiment, i'm thinking we don't see a bottom until 3rd/4th quarter 2009. Analysts have lowered their revisions, but they still seem too positive about next year, and the bottom is usually at the point where panic is everywhere, and even the analysts are extremely pessimistic.
according to bloomberg, (http://www.bloomberg.com/apps/news?pid=20601213&sid=aWCycxkOyF7o&r efer=invest)...
"David Kostin of Goldman Sachs Group Inc. predicts an advance because U.S. companies are cheap relative to earnings. Strategas Research Partners' Jason Trennert is counting on a resumption in bank lending to lift equities. Thomas Lee at JPMorgan Chase & Co. says stocks are swinging so much that a 25 percent jump by Dec. 31 isn't out of the question. [...] Strategists were also calling for a record gain at this time last year, after the first quarterly decline in corporate profits dragged the S&P 500 down from its high of 1,565.15 on Oct. 9. It never materialized and stocks have dropped 41 percent since."
and...
"The average Wall Street forecast calls for the S&P 500 to break out of a bear market and surge 20 percent to 1,118 by Dec. 31 -- more than twice as much as the biggest-ever advance to close out a year"
and finally...
"The strategist who cut his projection the most since September was Deutsche Bank AG's Binky Chadha. Chadha abandoned his year-end call for the S&P 500 to reach 1,350, decreasing it on Nov. 7 to as low as 800 and becoming the first strategist to acknowledge the possibility that stocks may fall for the rest of the year. "
Given the optimism, even if it is among the pros, i don't think we're near a bottom yet.
160 points
Einstein answered one year ago …
This is not a bottom....... A bottom will occur when we have some good news coming in such as a few months a good earnings, the housing market easing, the banks stabilizing and more than everything unemployment easing....
The big factor is Obama and what policies he will pose. I think with tax hikes ahead and who will be in Obamas Cabinet
the market will get a grip on anything for the upside until we have these answers
904 points
jillybeansisme answered one year ago …
My forecast: Scattered patches of darkness for the near future . . . which means there's scattered patches of light for the near future. Thus, your basic head fake. The markets are like Dorothy in the tornado (yes, Wizard of Oz). But then, remember, there was a good ending!
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