I'm still sketchy about this possible reversal. I will say that this feels like a reversal, if not it should happen soon.
I hate to sort of agree with Barry, and I'm not sure if he has changed his mind or is now hedging or whatever, but I just think this is the kind of low that holds for a while, Month-Months.
My thesis is that we need a high volatility low, then a low volatility low, and if we don't have a nice bounce this will continue to be a part of the High volatility low, and will still need to be confirmed with a Low volatility low.
We haven't seen a Higher Low in quite some time... My mojo may be off in identifying them...
Tuesday, November 11, 2008
so......
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It's eery how similar the S&P looks to October 1974.
If I remember correctly, that market drop was news driven with Nixon stepping down in the summer and Ford pardoning him in the fall.
Of course, there was a lot of fundie garbage too with inflation etc, but the news was a big part of the drop.
Just interesting... I don't how it correlates to today, but the pattern is very similar.
Other issues:
1) Barry has been bullish on stocks lately.
2) Friday, the hedgies will announce redemptions and stock holdings... this may be what eh bulls are looking for since everyone is expecting the worst. I gotta believe that the hedgies are done selling stock, what do you think?
Part of my thesis is that a "Crash" most of the time Is the low, or that there usually is not a follow through low for a significant amount of time(1-3 months), after the Crash momentum.
Teresa says maybe Discouragement, I'd suggest discouragement will be next quarter. And we will have a better idea of the new Macro picture by then.
the 1974 was inflation/price controls off the gold standard. But that is the same model I'm talking, but the ultimate low on the index was December If I remember, on the dow, but not the SPX... I think. That second low was based on the NFP and it's following Weekend. I'm curious if that was the highest job loss numerically on the NFP.
now the 1971 low was the Credit Crisis/financial Crisis of that Bear market, just to warn you.
Apparently you are right about the Redemption's, and I'd say that many more people will feel comfortable getting long, After that. As will some of the Hedgefunds because they will have some time before the new redemption cycle. As a Narrative, that is a good reason to get long, But we may want to anticipate that....
Correct, the double bottom in 1974 occurred with nadirs in Oct and Dec, and then the market went on a tear back up to the previous levels.
Teresa's Discouragement graphic shows peaks and troughs with the process taking a while.
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