No bottom in sight for this bear market–it’s just the beginning?

@ 4:03 pm
GMI0/6
GMI-R0/10
T210813%

I have written a number of times that one can ignore the fundamentals and all of the media pundits and just let the market tell us what it is likely to do.   When you are crossing the street and a truck comes bearing down on you at high speed, you should not argue with the fact that it is there.   You should not wait in the street for the truck to stop and/or exclaim incredulously that it should not be there.   One needs to move quickly and get out of the way or jump on board the truck,   if that is the goal.

I have been in cash for all of the major declines since 1995.   (I also avoided the 1987 debacle.) I have never been caught married to my long positions,   arguing with the market or hoping that a decline will end.   No one can detect a bottom until sometime after it has occurred.   Why do people look to experts to predict the market when none of them predicted the current decline!   Experts are really great at explaining to us after the fact, all of the reasons why the market declined.   When someone can tell me the reasons before the decline occurs, then I will listen.

So, what can the market tell us about how bear markets have ended?   I showed you several posts ago that the current market is tracking somewhere between the 1929-1932 and 1974 bear markets.   How did these huge declines end?   It turns out that they showed amazingly similar characteristics.  

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Don’t fight the trend; QQQQ in 7th day of short term down-trend; bear market bottoms are marked by huge up volume

@ 12:06 am
GMI0/6
GMI-R0/10
T210815%

With the GMI and GMI-R at zero, I think it is not the time to fight this down-trend.   The major indexes look terrible and the QQQQ completed the 7th day of its short term daily down-trend within a longer weekly down-trend.

The key to survival in the market is to lose as little as possible during the worst times.   Conserve money so as to be ready for the inevitable turn.   I have studied all of the prior bear market bottoms and a common characteristic is huge weekly up volume.   We have not had anything like that.     We need to sit tight and wait for several days of   large volume rises. I remain short and mainly in cash.

Take the poll to the right and let’s see if it is a useful contrary indicator.

Inroducing new T2108 pendulum; T2108 recovers from oversold 9.5% on Tuesday

@ 10:13 am
GMI0/6
GMI-R0/10
T210814%

My son and webmaster, Mike, has added a new visual representation of the Worden T2108 Indicator.   This indicator acts as a pendulum   of the market technicals, going from extreme readings of oversold, around 15% or below, and overbought, above 75%.   It seems to me to work better with oversold readings.     After an extreme oversold reading the market tends to rally quickly, as yesterday.

On the other end, especially in bull markets, it can remain above 75% for months.   On January 6, it topped out at 89%, and the present decline began right away.   At its low in October, it bottomed out around 1%.   Only at the 1987 crash, did it register a reading below 1%.   This bear market has resulted in very low readings, hitting 4.9% on November 2nd.

The indicator is charted daily in TC2007 back to October, 1986.   T2108 measures the percentage of all NYSE stocks that closed above their simple 40 day moving average.   The way I should use it during a bear market, is to not initiate new shorts when T2108 is oversold, and to watch for   retracements in my short stocks.   Another way would be to buy the Index ETF’s or options   when T2108 is very oversold.   Note, however, that if I do not post on a specific day, the pendulum will show its value as of the date and time of the last post.   Good luck using T2108!