The stock market is like a giant puzzle and it’s our job to recognize patterns that are in the process of forming right now, then compare them with past events, to form a conclusion about how you’ll proceed. Sometimes these puzzle pieces just fit, sometimes they don’t, and other times we have to force them a little to solve the puzzle.

Just as I was about to go to bed I remembered something I read awhile back from Larry Williams regarding market bottoms. I often take notes from various books, magazines, or web articles documenting pertinent information that I feel has valuable insight that I’ll want to reference at a later date. I want to share with you pieces of an article that shows similarities of past bear market bottoms and what they could possibly look like. I think what you’ll find interesting is how many of these characteristics are exactly the same as what we are experiencing now. Even though I’m bearish for the stock market, it’s important not to get so entrenched on the bull or bear side, but be on the winning side.

I can’t remember which book this information comes from, but all of these are Larry Williams ideas describing how market bottoms can often play out .

  1. Most take 2 days, and usually on a Monday and Tuesday.
  2. Often at the end of the month or at the end of a large down move lasting anywhere from 9+ wks – 16 wks.
  3. Averages zoom higher than yesterday’s close. If we’re down tomorrow, for this to follow this pattern we would have to move higher than Tuesday close on Wednesday.
  4. Also seem to occur at important support areas where technicians say if if we break below this point watch out below.” Watch 10k level.
  5. Should have already been 2; ideally 3 short-term rally attempts since down turn began.

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