How I learned to love the Bomb!... Or Buy the top... or sell the bottom... or DO neither.

Don't let anyone bullshit you, We all Buy the top, and sell the bottom... Emotionally.
A week ago, We talked about "Mean Reversion" and "Fundamental Value", Stocks will primarily Mean revert to their Fundamental Value..... Cause that is how markets Work. In the above chart I've marked the Mean Reversion of the Hypothetical stock. Assuming No Earnings Growth over time. The fundamental value of the stock is $10, but what it will tend to do, is move (seasonally) between it's low value and it's high value. Obviously, we want to buy stocks that are Cheep, and sell them when they are expensive. Unfortunately, emotionally we want to throw them away when we have lost a lot of money and we want to hold them, when they have gone up.... and when we have plenty of profits to lose.
I like this Sentiment chart Much Better, but the emotions are not put into sentences. What I REALLY like about this chart is that the Wave are in Elliot waves(kind of), which I have added... You can almost put this chart up to your charts, and match them up... and you can figure out where we are. ... But you also have to notice is that Each stock and index goes through it's own stages.... Like they say "it's not a Stock Market, it's a Market of Indexes."... and for the Broad index to "top" a Majority of indexes need to be in some stage of this, and some will "top" before the index.

But... Realize... Maybe this cycle, Consumer Non-Cyclicals, and healthcare, Which on the decline Bottomed First, And now have Peaked first(I believe). But now the other sectors need to Top Out, (naz, Consumer dis, Financials)... ok maybe financials can peak After the index... that would be crazy!... and some of them may not make a new high.

Notice, on the first decline, almost half way down there is a small pause. Then after the stock hits panic, it catches a Bid.... a false bottom for a little while. This is also that point where "Valuations are good"... Because it's true, Valuations are Good... Problem is It's not Cheap... We want Valuations to be "GREAT"

That is why I don't believe oil has bottomed, Right now at $110 is the first time we have seen any form of attempt to knife catch. But that first time something catches a Bid in a decline is almost always a False bottom.... But it can last for a while...... But what Oil, and Joe Terinova are now getting is..... Discouragement... I almost guarantee oil will break 110, move to 100 and he will be like "nope stay away from it."..... that will be a "bottom".

I'd also like to see gold move to like $750-780, and see all the Knife catchers too afraid to touch it... and Maybe I'd be into it.

Another point, as far as making your money go far, it's smarter to try and catch things between the "Warning stage" through "panic stage"if you are going short and After Aversion stage to the point it goes parabolic. that is where your money is best put to work, The other places, your money is just Biding time..... Just waiting.