OT: Double Bottoms

I always expect to see a test of the lows for bad selloffs like we had (bad = big and fast). Looks like we may be getting it soon, maybe too soon. Today we finished at the lows of the day, never a good sign. It is looking like this is more than an unwinding of a bad leveraged ETN (XIV - which gets repriced at the end of every day).

In fact, checking the charts again, the DOW is not quite to the recent low but S&P looks right on it while Naz is a tad below it. Will we get a hold of this level? If not, look out below, it may not be rational, but the market is often irrational, so you would be irrational not to take that into account :wink:

I do not have as much cash as I would like ;-(

It will update the market trend OT thread I started later. May have to start a new one for OT: Market Correction. We are there in my mind, Naz volume definitely higher than yesterday to it will be distribution day 7, most of which were big % moves. bad, bad, bad.

17 Likes

oops, looked at the charts before the final update, way worse than I thought, we put in a new bottom, so no double bottom yet.

1 Like

(May be OT for this board…usually I post on METAR…)

Bottom? What makes you think that this is a “bottom”?

The Cyclically Adjusted P/E Ratio (CAPE Ratio), which is the Price-to-earnings ratio of the S&P500 based on average inflation-adjusted earnings from the previous 10 years, is double the historical median. The P/E ratio has been pumped up by an unprecedented tsunami of free money provided by central banks around the world. This tsunami is now receding.

http://www.multpl.com/shiller-pe/

A declining trend in Treasury yields which began in 1980 may be about to reverse due to increasing government borrowing at the same time that the Federal Reserve is shedding its huge book of Treasuries.

http://www.multpl.com/10-year-treasury-rate

If this is the beginning of a genuine bear market (not just a flash in the pan caused by program trading) the bottoming process will take about 6 months. Traders will be forced out of good positions by margin calls and by program trading as the market drops.

http://www.macrotrends.net/2324/sp-500-historical-chart-data…

Sorry to bring this Macro message to the wrong board. But please take care. It could be a dangerous world out there.

Wendy

24 Likes

Bottom? What makes you think that this is a “bottom”?

That was before I refreshed the charts for the last few minutes of trading!