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Thursday, January 22, 2009 4:21:37 PM
2002 is a good analogy for what is going on in the market now. The best comparison of the last 30 years. It does not matter to me that macro economics might be more similar now to 82 or 75 than 2002.
What I am talking about is volume analysis, technical analysis and sometimes sentiment analysis.
True these are not the only factors that should be taken into account when attempting to determine when, or if, a market bottom has actually formed but it is reliable.
StockCharts only has volume for the INDU going back to 1980 so I will use that in my examples.
Even in 1987 on Black Monday there was a huge down draft that led to a one month high volume decline followed the next month by much less selling as the sell off finished quickly. Then the following month the market rallied on volume higher than the previous month:
Over the last ten years the INDU has taken two huge trips below its long term moving averages. It was never under those averages for long until this decade since 1980:
RtS
What I am talking about is volume analysis, technical analysis and sometimes sentiment analysis.
True these are not the only factors that should be taken into account when attempting to determine when, or if, a market bottom has actually formed but it is reliable.
StockCharts only has volume for the INDU going back to 1980 so I will use that in my examples.
Even in 1987 on Black Monday there was a huge down draft that led to a one month high volume decline followed the next month by much less selling as the sell off finished quickly. Then the following month the market rallied on volume higher than the previous month:
Over the last ten years the INDU has taken two huge trips below its long term moving averages. It was never under those averages for long until this decade since 1980:
RtS
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