Thursday, July 8, 2010

Where's The Bottom?

Despite the mini-rally of the last two days I hear this question being asked a lot.  We all want to know when the slide that started in May will end.  From those who want to buy blue chip dividend-payers to those who are just looking for a short-term trade, everyone wants to know.  Fact is, I've spent every spare moment of this last (moist) ten days researching the topic.  My conclusion: we're in a very short-term "tradeable bounce" back up to the long-term downward trend line.  If this sounds like a conclusion reached by technical analysis, it is - courtesy of StockScores' founder Tyler Bollhorn.  However, technical analysis was only my last stop on this particular quest.  I have checked out at least a baker's dozen different non-technical indicators and at least that many trusted market analysts, and they are all either non-committal or distinctly bearish.  My advice: keep your powder dry for now.  If we're lucky it'll be a typical incessantly downward path until investor capitulation and a rebound, if not - we could be on the verge of another major financial meltdown into a deflationary recession or full-blown depression.  (As regular readers will know, I'm in the latter camp, although I take no pleasure in it.  People just don't want to hear that.)  This is not the bottom.  Bear market rallies are to be sold, bull market dips are to be bought.