Everybody has one question tonight. Is the stock market going to bottom soon? So I decided to ask my magic 8-Ball.

8-ball

I debated whether to write up a commentary about today’s action as it could change in a flash if we suddenly hear that the bailout is suddenly approved, but I thought I’d ad my two cents. I just felt compelled to check the news to see if we had any breaking news, nope…not yet, it’s safe to continue writing. Don’t you just love it when the media uses red in their headlines, or huge print to try and scare us. Marketwatch is infamous for those little tricks. Whenever the market is plunging I always try and guess what gloomy headline their going to try to scare us with. I never get it right.

When I’m using my indicators to try to determine when the market has sold of enough to begin initiating positions I’m looking for some extreme conditions on 3 or 4 different conditions. Here is what I’m seeing as far as extreme goes:

  1. Lowest amount of scan results ever tonight. (8) But that’s a minor one, and not very surprising.
  2. Biggest one day point move down on the DOW. Although I’m inclined to lean towards % moves as being better when comparing previous moves. I just don’t know if I really want to see a 2500 point move to the downside.
  3. VIX spike– What kind of an analysis would I be if I didn’t mention this. I really don’t have this in my toolbox of indicators I track, but I do keep an eye on it. It’s just way to mainstream for me right now as I use the Put/Call ratio more as well as the Equity Put/Call. The Vix is high yes, and I may be too picky when I say it feels like it could move higher, but I don’t think we’ve hit capitulation. Selling today still felt orderly.

nysi

The McClellan Summation index generally oscillates between 0 and 2000 although it can move outside of this range during extreme or unusual market conditions. Historically, major market bottoms occur after the index falls below -1000. Readings above +1600 often indicate a major top is near. This indicator has plenty of room to the downside.

cpce

We really need to see the herd buying more put options right now. When everybody begins buying put options like there’s no tomorrow, the market will bottom, flip, and move higher. The mere fact that I was looking at stocks to go long earlier this evening confirms that there isn’t enough bearish sentiment out there.

One Response to “Magic 8-Ball Says…”

  1. BuyOnTheDip.com Says:

    your 8-ball is more of a magic Die.

    market = dead.

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