Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
SPX/Gold, Long-term Yields & Yield Curve 3 Amigos Update - 22nd Jun 18
Gold - How Long Can This Last? - 22nd Jun 18
Dow Has Fallen 8 days in a Row. Medium-long Term Bullish for Stocks - 22nd Jun 18
Trouble Spotting Market Trends? This Can Help - 22nd Jun 18
Financial Markets Analysis and Trend Forecasts 2018 - A Message from Nadeem Walayat - 21st Jun 18
SPX Bouncing Above Support - 21st Jun 18
Things You Need To Know If You Want To Invest In Bitcoin Now - 21st Jun 18
The NASDAQ’s Outperformance vs. the Dow is Very Bullish - 21st Jun 18
Warning All Investors: Global Stock Market Are Shifting Away From US Price Correlation - 20th Jun 18
Gold GLD ETF Update… Breakdown ? - 20th Jun 18
Short-term Turnaround in Bitcoin Might Not Be What You Think - 19th Jun 18
Stock Market’s Short Term Downside Will be Limited - 19th Jun 18
Natural Gas Setup for 32% Move in UGAZ Fund - 19th Jun 18
Magnus Collective To Empower Automation And Artificial Intelligence - 19th Jun 18
Trump A Bull in a China Shop - 19th Jun 18
Minor Car Accident! What Happens After You Report Your Accident to Your Insurer - 19th Jun 18
US Majors Flush Out A Major Pivot Low and What’s Next - 18th Jun 18
Cocoa Commodities Trading Analysis - 18th Jun 18
Stock Market Consolidating in an Uptrend - 18th Jun 18
Russell Has Gone Up 7 Weeks in a Row. EXTREMELY Bullish for Stocks - 18th Jun 18
What Happens Next to Stocks when Tech Massively Outperforms Utilities and Consumer Staples - 18th Jun 18
The Trillion Dollar Market You’ve Never Heard Of - 18th Jun 18
The Corruption of Capitalism - 17th Jun 18
North Korea, Trade Wars, Precious Metals and Bitcoin - 17th Jun 18
Climate Change and Fish Stocks – Burning Oxygen! - 17th Jun 18
A $1,180 Ticket to NEW Trading Opportunities, FREE! - 16th Jun 18
Gold Bullish on Fed Interest Rate Hike - 16th Jun 18
Respite for Bitcoin Traders Might Be Deceptive - 16th Jun 18
The Euro Crashed Yesterday. Bearish for Euro and Bullish for USD - 15th Jun 18
Inflation Trade, in Progress Since Gold Kicked it Off - 15th Jun 18
Can Saudi Arabia Prevent The Next Oil Shock? - 15th Jun 18
The Biggest Online Gambling Companies - 15th Jun 18
Powell's Excess Reserve Change and Gold - 15th Jun 18
Is This a Big Sign of a Big Stock Market Turn? - 15th Jun 18
Will Italy Sink the EU and Boost Gold? - 15th Jun 18
Bumper Crash! Land Rover Discovery Sport vs Audi - 15th Jun 18
Stock Market Topping Pattern or Just Pause Before Going Higher? - 14th Jun 18
Is the ECB Ending QE a Good Thing? Markets Think So - 14th Jun 18
Yield Curve Continues to Flatten. A Bullish Sign for the Stock Market - 14th Jun 18
How Online Gambling has Impacted the Economy - 14th Jun 18
Crude Oil Price Targeting $58 ppb Before Finding Support - 14th Jun 18
Stock Market Near Another Top? - 14th Jun 18
Thorpe Park REAL Walking Dead Living Nightmare Zombie Car Park Ride Experience! - 14th Jun 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

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

© 2005-2018 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