Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20
Gold Mining Stocks Fundamentals - 18th May 20
Why the Largest Cyberattack in History Will Happen Within Six Months - 18th May 20
New AMD Ryzen 4900x and 4950x Zen3 4th Gen Processors Clock Speed and Cores Specs - 18th May 20
Learn How to Play the Violin, Kids Activities and Learning During Lockdown - 18th May 20
The Great Economy Reopening Gamble - 17th May 20
Powell Sends a Message With Love for Gold - 17th May 20
An Economic Renaissance Emerges – Stock Market Look Out Below - 17th May 20
Learn more about the UK Casino Self-exclusion - 17th May 20
Will Stocks Lead the Way Lower for Gold Miners? - 15th May 20
Are Small-Cap Stocks (Russell 2k) Headed For A Double Dip? - 15th May 20
Coronavirus Will Wipe Out These Three Industries for Good - 15th May 20
Gold and Silver: As We Go from Deflation to Hyperinflation - 15th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Stock Market Bottom, Are We There Yet?

Stock-Markets / Financial Crash Oct 10, 2008 - 11:45 AM GMT

By: Dr_Janice_Dorn

Stock-Markets Best Financial Markets Analysis ArticleThese are unprecedented times. The markets are showing their true animal nature because they are trading on emotions, rather than on technicals or fundamentals.


Even the most seasoned market veterans are scratching their heads.  Where is the rally?  What are people waiting for?  What about the “dirt cheap” valuations on a number of stocks?   What about the extreme sentiment of doom and gloom?   Bullish sentiment is now the lowest since the summer of 1994, so where is the contrarian sentiment reaction?  What about the “big boys” stepping up to the plate to buy here?  What about the new and unprecedented global rate cuts?  What about the old adage about buying at Yom Kippur and selling at Rosh Hashanah?   Where?  What? Why?

 Despite the fact that the broad markets are massively extended to the downside ($INDU now more than 2000 points below its 200 period moving average), we are not there yet.  The action today showed that the selling is not yet exhausted.  In fact, it did what the clever bear does—it gave a ray of hope to people.  IBM movement to the upside after the close today has given a lift to the futures that could be good for a positive start to the day on Thursday.  Citigroup and Wells may settle their dispute over Wachovia tonight, and this may help by removing some uncertainty from the markets.  

Will these be catalysts for a massive rally?   We shall see, and I will believe it when I see it.  One thing I do know is that, when this rally comes, it will be powerful because the rubber band to the downside is pulled so tightly that it has to snap soon. Also, it will give people hope that the worst is over, and they will begin to pile into the markets again once their post-traumatic stress disorder (from selling at the bottom) is resolved.  By the time this happens, it will be near the end of the up move and it will look so good and tempting that they will then be clamoring to get in.  This is how bear markets work.  The tables are turned.  The bear sets traps for us instead of the other way around. The bear sets bull traps to catch greedy bulls.  Behavioral finance tells us that the majority of traders will be greedy when they should be fearful and vice versa.

 We have not seen a true gap down and reversal, indicating that the last of the sellers could no longer take the pain, cried “uncle” and wanted out at any price.   This is what people want to see, and they are not getting it. It may not come, but it does appear that there is enough fear to ignite a spark for the next rally.  Now is the time to prepare for this and we don't have to be right there when it happens.  We will give up the first 10% and the last 10% of the coming rally to get the middle 80%.  Why?  Because we don't like to be stabbed by trying to repeatedly catch falling knives and go through the psychological torment of getting in, getting stopped out, getting in again and getting stopped out, etc.  It is too taxing and draws down on both financial and psychological capital.

The rally will come out of the blue when people are just so worn down and sold out that they stand in awe, disgust and regret when they see it.  We are overdue in price, and just about right in time for it to happen.   Like a watched pot that never seems to boil until you walk away, the rally will catch most people by surprise. 

In terms of Elliott wave (for all the wavers out there), this will likely be a “B” wave rally that could take the $SPX up to 1290 over the next few months.  No one really knows for sure when, but we will know it when we see it and we will do one of four things—depending on our position in the markets when it happens. 

(1) trade with longer time frames, especially if we can catch a trending market ;

(2) use this rally to sell all underperforming assets

(3) hope that we are lucky enough to catch the middle of this move

(4) continually remind ourselves to be in touch with our feelings of greed and fear so that we have courage to get in when it feels a little uncomfortable, and start taking money off the table when it looks and feels safe and comfortable..    

Until  Next Time,

Good Trading and Brain On!

By Dr. Janice Dorn, MD, PhD
Prescriptions for Profits
www.thetradingdoctor.com

Signup for your risk-free subscription to the Trading Doctor Newsletter. If you are not completely satisfied that our newsletter is for you just let us know, via email, within 7 days of your subscription date and we'll immediatly refund your money.

© Copyright 2006-08 -- Janice Dorn, M.D., Ph.D. -- Ocean Ivory LLC

Dr. Janice Dorn is a graduate of the Albert Einstein College of Medicine, where she received her Ph.D. in Neuroanatomy. She did her postdoctoral work in Neurophysiology at the New York Medical College. She received her M.D. from La Universidad Autonoma de Ciudad Juarez, did one year of clinical clerkships in Phoenix, Arizona. and then completed a Neurology Internship at The University of New Mexico in Albuquerque. For the past twelve years, Dr. Dorn has focused her attention on trading, mentoring and commentary in the financial markets, with emphasis on Behavioral NeuroFinance, Mass NeuroPsychology, Trading NeuroPsychology, Futurism and Life Extension. A graduate of Coach University, she is a full time futures trader and trading coach.  Dr. Dorn is the author of over 300 publications, relating to Trading and Investing Neurouropsychology, Market Mass Neuropsychology, Behavioral Neurofinance, and Holistic Wellness and Longevity. 

Dr. Janice Dorn Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules