Q: Where is the DOW bottom? A: Answer Below

[Shabber2]

OK, don't get too worked up about my Subject line, we all know only a true clairvoyant could know the bottom, but here is my quick analysis from about a month ago:

I looked at our bear market and compared it to what a 2001 downturn could look like.

In 2001, I see a 11,700 high falling to a 9,800 low and then a 10,500 meander along. Meaning a 15.9% fall and 10% meander (Definition See Footnote Below).

Translated to current a 14,093 high makes it a 11,857 bottom and a 12,624 meander.

So, seems to me pretty reasonable to see us fall and continue down to this 12k mark, and we can expect the 12,600 meander.

Technically speaking aside, I look at what could turn things around for 2008 and don't see it. we are dealing with the war costs, oil prices, mortgage meltdown, a Democrat being President, no home equity loan spending and a queasy job market. Nothing saying, "Hey we are just about to turn the corner."

(Here is my caveat to this...if we bust through 11,800 I don't see another nice bottom until 10k. This is too painful to think about, so I will ignore it.)

Footnote:
Meander: Noun, meaning a winding path or course

Thoughts?

 

[ERD50]

I can't think of a single reason why the 2001 downturn should have any predictive quality for the current downturn.

My thoughts? I don't know. Could be major, long term drop, could be a buy opportunity blip. We will know when it is over.

-ERD50

 

[Dawg52]

My thoughts? I don't know. Could be major, long term drop, could be a buy opportunity blip. We will know when it is over.

-ERD50

No one else does either. But you can be sure when it's over, there will be plenty who said they predicted the bottom.

 

[Coach]

Shabber2, I admire your guts in being willing to publish a prediction.

Coach

 

[FinanceDude]

I think 11,000 is the bottom, but that's only a gut feeling. If it hits 11,000, I'll be buying some Diamond ETF's..........

 

[Mysto]

The bottom is 0 (unless you're leveraged) but I hope we won't go that low.

My gut says perhaps a way down yet based on the fact that CNBC says that they are getting many emails from viewers asking if this is the time to get in. When those stop - I say we are close to a bottom.

I have missed on these before as my real power is post-cognition. I look into the past and tell you what has already happened, but... I am over 85% accurate.

 

[SecondCor521]

I thought meander was a verb.

I also think you didn't make a testable prediction.

2Cor521

 

[maddythebeagle]

I predict the bottom at 11,500 for the Dow....I am simply basing my guess on it being an election year and the government has already shown its cards that they are going all out to stop the markets from sliding....

 

[Bestwifeever]

Do you mean "me and er"?

 

[Spanky]

The bottom is 0 (unless you're leveraged) but I hope we won't go that low.

Let's keep our fingers crossed.

 

[FinanceDude]

Capitulation, anyone??

 

[maddythebeagle]

Capitulation, anyone??

anyone, anyone, anyone? http://finance.yahoo.com/expert/article/yourlife/62337

 

[NotSoonEnough]

Capitulation, anyone??

Perhaps, and still some distance to go before Despair...

 

[dmpi]

Capitulation, anyone??

I'm hoping Monday was it. People heard about the international markets and had all weekend + monday to stew over it. They had a boat load of sell orders stacked up for Monday's open.

 

[retire@40]

600 point swing in the market.

I don't get it, so I'll just keep doing what I have been doing and keep my allocations as they are.

 

[Shabber2]

Here is the 12600 meander. Excited to see this thread in December.

 

[jazz4cash]

anyone, anyone, anyone? http://finance.yahoo.com/expert/article/yourlife/62337

I enjoy Ben Stein (not saying he's a guru or whatever, just enjoy his columns), but I read this awhile back and his definition of recession jumped out at me:

"A recession is six consecutive months of negative economic growth. At most, December 2007 would be our first month, so we wouldn't know until sometime in June 2008 if, by the end of May 2008, we'd been in a decline for six straight months. So no matter what anyone tells you, we can't know if we're in a recession yet."

Six months? Really? I always thought it was two quarters and just accepted Ben's suggestion that we could go into and out of a negative growth period of six months and it may or may not count as a recession depending on the calendar. Just another quirk of economics. I assume economic events largely ignore the financial calendar. I did find some support for my understanding of recession

in wikipedia:
"In macroeconomics, a recession is a decline in a country's gross domestic product (GDP), or negative real economic growth, for two or more successive quartersof a year."

and investopedia:
"The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP)."

So......is ol' Ben going soft in the head or am I being too anal or is this one of those terms you could just tweek the definition to fit the situation...or something else?

 

[Marquette]

So......is ol' Ben going soft in the head or am I being too anal or is this one of those terms you could just tweek the definition to fit the situation...or something else?

Two quarters becomes six months when you're striving to dumb down your writing.

 

[DblDoc]

My crystal ball says that looking back 20yrs from now 2008 was a good year to be buying stocks...

DD

 

[Notmuchlonger]

My crystal ball says that looking back 20yrs from now 2008 was a good year to be buying stocks...

DD

Every year is a good year to buy stocks

 

[jazz4cash]

My crystal ball says that looking back 20yrs from now 2008 was a good year to be buying stocks...

DD

Which stocks specifically does your ball recommend?

 

[megacorp-firee]

Every year is a good year to buy stocks

that's the mantra to success: DCAaaaaaa.... DCAaaaaa, ....DCAaaaa

 

[Marquette]

Which stocks specifically does your ball recommend?

Wait for it.....

getting stronger...

Here we go.

VTSMX


Care to buy my newsletter?

 

[jazz4cash]

Why buy when I get the goods for FREE!