What Does a Market Bottom Look Like…Today!

[jamestai]

Hi,

Interesting site that I come across to share.

http://howardlindzon.com/what-does-a-ma ... ike-today/

Posted by Howard
on October 4th, 2011

I doubt today was a long-term stock market bottom. I hope it is. I don’t have any money pinned on hope though.

Here is how I called it on the Stocktwits stream today. We are working to make it easier to ‘rewind’ back to moments in time. Trust me it’s wicked cool but our team can’t grow fast enough for all the stuff we need to do. There are so many smart people now sharing in real time on our platform. Days like today remind me that we have all really built a platform together for sharing ideas. It’s thrilling.

I share (often overshare) because it makes me a better investor. Period. It is fun to get followed, liked and even to pound your chest when you are right. It does not make you a bad person.

There is no RIGHT way to use Social Media, there are better ways and wrong ways. In 5 years we will have way more proof on the best practices and right ways to use the media.

In the meantime, I am so happy that we are using Stocktwits as an extension of my personal case study of a journey I started with my first blog post on Google Blogger, now WordPress and Twitter and Stocktwits. I am just a way better investor and trader.

The last two months have been super brutal for ivestors and I have been very cautious. Today we had many more ingredients of a bottom.

There is really big fear.

Apple was selling off super hard as was Amazon.

Goldman Sachs was in the low 80′s…it was just $108.

The sentiment to the short side, even on Stocktwits… was giddy.

The Goldman Sachs late night downgrade of the US GDP….and rushed to Bloomberg.com was my icing on the cake. Those asshat thieves were up to something in the futures market. It’s tea leaves stuff you just start getting used to seeing.

All day today they chopped the market around, but the close was significant.

The ultimate and exact bottom is not important. You did not need to buy March 9th of 2009 to make all the money.

We need to stop going down first. Today was the first day it felt like people were tired of selling.

Prices got a little interesting. There is oooooooooodles of cash out there hiding in zero percent long-term interest. I am not bullish and I was taking trade profits in Apple and Amazon at the ned of the day but am holding my Premium and added soome $RNOW as well.

We need leadership though and we are a LONG way from that.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

James Tai

[Dennis Ng]

Hi,

Interesting site that I come across to share.

Posted by Howard
on October 4th, 2011

http://howardlindzon.com/what-does-a-ma ... ike-today/

I doubt today was a long-term stock market bottom. I hope it is. I don’t have any money pinned on hope though.

Here is how I called it on the Stocktwits stream today. We are working to make it easier to ‘rewind’ back to moments in time. Trust me it’s wicked cool but our team can’t grow fast enough for all the stuff we need to do. There are so many smart people now sharing in real time on our platform. Days like today remind me that we have all really built a platform together for sharing ideas. It’s thrilling.

I share (often overshare) because it makes me a better investor. Period. It is fun to get followed, liked and even to pound your chest when you are right. It does not make you a bad person.

There is no RIGHT way to use Social Media, there are better ways and wrong ways. In 5 years we will have way more proof on the best practices and right ways to use the media.

In the meantime, I am so happy that we are using Stocktwits as an extension of my personal case study of a journey I started with my first blog post on Google Blogger, now WordPress and Twitter and Stocktwits. I am just a way better investor and trader.

The last two months have been super brutal for ivestors and I have been very cautious. Today we had many more ingredients of a bottom.

There is really big fear.

Apple was selling off super hard as was Amazon.

Goldman Sachs was in the low 80′s…it was just $108.

The sentiment to the short side, even on Stocktwits… was giddy.

The Goldman Sachs late night downgrade of the US GDP….and rushed to Bloomberg.com was my icing on the cake. Those asshat thieves were up to something in the futures market. It’s tea leaves stuff you just start getting used to seeing.

All day today they chopped the market around, but the close was significant.

The ultimate and exact bottom is not important. You did not need to buy March 9th of 2009 to make all the money.

We need to stop going down first. Today was the first day it felt like people were tired of selling.

Prices got a little interesting. There is oooooooooodles of cash out there hiding in zero percent long-term interest. I am not bullish and I was taking trade profits in Apple and Amazon at the ned of the day but am holding my Premium and added soome $RNOW as well.

We need leadership though and we are a LONG way from that.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

James Tai

Hi James Tai,

thanks for sharing this article.

There are conflicting Views and Opinions everyday. Some say market bottom, some say it's the beginning of a Crash.

Here's an example of view that this is the Beginning of a Crash:

http://www.safehaven.com/article/22895/ ... rt-pattern

Another Similar 2008 Chart Pattern
By: Tony Pallotta | Wed, Oct 12, 2011


This post was written on October 12, charts are not updated for today's price action.


"He observed that human emotions collectively had major impacts on the movement of stock prices and markets in general, ultimately creating patterns that kept repeating." - From a book on Jesse Livermore's trading style

Without a doubt one common similarity between the current market and the fall of 2008 is heightened investor emotions. There are plenty of other similarities from bank nationalizations, a deteriorating global economy and government intervention.

There were wild swings and volatility that whipsawed traders out of positions and saw paper profits appear and disappear in very short order. Traders then as they are today were simply exhausted and decisions were more influenced by emotions than macro data, technical analysis or convictions.

I strongly believe in Jesse Livermore's theory about human emotion forming patterns and since humans never change patterns will often repeat. I've been trying to find a pattern that compares to the current market. A roadmap if you will of how this emotional roller coaster finally plays out.

I think I may have found it. Below are two charts. The first shows a rounded top pattern that appeared twice in the fall of 2008.

SPY SPDR S&P 500 Trust - 2008
Larger Image

The next chart shows the current markets (SPY 60 day 4 hour chart) versus the fall 2008 (SPY daily chart). There are six points of reference, five are tops Point A, B, C, D and E and one bottom Point F. In both cases the behavior of all six points are identical.

What I found most intriguing was how Point F saw the biggest rally into Point E of the entire pattern. If you look at the pattern notice how the top remains symmetrical while the bottom loses its symmetry beyond the half way point and begins turning lower.

(SPY 60 day 4 hour chart) versus the fall 2008 (SPY daily chart)
Larger Image

My reason for finding such interest in this comparison is as Jesse Livermore said human emotions never change and they are repeated in patterns. The emotions facing traders now are the same as in the Fall of 2008. Those emotions are reflected in price fluctuations. They lead to violent swings. They lead to whipsaw action as decisions are made in haste, under duress.

There is no guarantee how the 2011 roadmap will play out but I find the 2008 similarities very intriguing. There is no reason to believe investor psychology is any different today than it was just three years prior.

Extra credit for those still reading. Here are a few other eerily similar comparisons.

In 2008 Point E was 106.25 versus 107.43 in 2011.

In 2008 Point F was 119.95 versus 120.04 (so far) in 2011.

May 19, 2008 the market topped at 133.78 versus 135.80 on May 2, 2011