- Trend 1 : The History Books.Uncanny knack of bottoming out in Oct. Second markets simply not end in the fifth year of the decade.Howerver a bear market likely end in second or eighth year of the decade.Since 1932 , the average length of bear market is around 12 months, the average drop in those 12 months is 26%.US market has a habit of bottoming out in the first or second years of the presidential term.
- Trend 2 : Rock bottom valuation .PE falls of around 10.http://irrationalexuberance.com/
- Trend 3 : Extreme volatility and negative investor sentiment. VIX Index in range of 40-50.
- Trend 4 :The 200 MA test. Fall way below 200 MA. If you bought the S&P every time if fell 20% below it 200MA in the past 33 years, than a month later you would have been in the profit of average gain 10%.
- Trend 5 : Early signs of economic improvement. When copper hit bottom, automotive sales start to rise and inventory levels are low.
- Trend 6 : Bond Market Rally.Government bonds and corporate bonds rally on average 10 and 4 months before equity markets finally hit their bottom.
- Trend 7 : McClellan Summation Index. MSO below minus 500.http://www.mcoscillator.com/
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