As I've posted before, I use VectorVest to find a lot of my picks. There is a market timing tool that has several metrics that are useful in calling the bottom. As of today, the figures have perhaps the best numbers to call a market low in over FIVE YEARS. On 9/17 we also had low figures that suggested an interim low. We did get a healthy rally the next day. The problem with this market is the level of manipulation. Quant programs like VV analyze volumes of data - but cannot contemplate what Congress may or may not do. I'm not so sure that Congress' actions will even swing the market one way or the other. The market seems to have a mind of its own these days.
The last very "high quality" market bottom called by VV was on Jan 22. The figures were:
Buys=7 Sells=59 B/S=0.12 MTI=.49
Today, the figures are:
Buys=5 Sells=67 B/S=0.08 MTI=.41
By comparative standards, these numbers have demonstrated we have clearly hit a solid bottom. I raise the issue again that the Jan 22 bottom would have most likely been lower had there not been an emergency rate cut of 0.75% before the opening bell! Had that rate cut not occured, the Jan 22 bottom may have produced VV figures like the ones put out today. The last time numbers of this quality were produce was back on 10/9/2002. Some astounding numbers were produced on 7/23/02:
Buys=2 Sells=77 B/S=0.02 MTI=.34
Both of these dates produced fantastic rallies immediately after.
Conclusion? By the numbers, this is an interim market bottom that should produce a strong rally. However, be very, very cautious here. This could be a big head-fake. With all of the legislation in place, the short selling ban extended, etc, we are NOT in normal times. That should always be remembered in a market like this.
As a side note, I added more GLD calls today, as well as some TBSI. For non-option traders, DLP might be a good buy right here as the dollar rallied and gold has fallen. Investors can buy a basket of commodities using DBC, which has put in a double bottom. A falling dollar should help boost these. The dollar rally probably does not have legs since the government is printing $100's of billions.
http://www.marketguru.com/opinions/market-bottom-prelude-crash/1002,1993
