Thursday, October 16, 2008

Market Reversal: Where is the bottom?

Where markets are heading? This is a million dollar question. To answer this question can by politically suicidal (and probably financially too).
I think bottom is formed on last Friday when Dow Jones hit below 7900 momenatarily.

* Last Friday, there was a REVERSE signal on very high volume for most stocks.
* Today, right at this moment, Dow Jones has come to positive line after dropping around 400 points. We don't know where it is going to close today but if it does close above today's Open, we will have a CONFIRMMING second reversal signal
* that will also confirm a higher bottom.
* One of the strongest signals for the end of the downtrend- I was in a team lunch yesterday when the dow was dropping around 700. Someone asked me if I was in the market. I said Yes and almost all faced showed pity for me! It is considered stupid to be in market right now... so probably most of the individuals (who by now have figured out it is stupid to be invested in market these days) are all out of the market! What does that mean? There are not many sellers in the market left now (weak hands I mean). When stocks are selling high (expensive), it is fashion to be invested and when there is a sale going on, people are abondoning..

Anyway, for today's post, if someone is to invest,
*make sure the stock or the market closes above today's Open (better if it close above Yesterday's Close)
* keep a stoploss at today's low.

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