What it's like at a Stocks Bear Market Bottom

Stock-Markets / Stock Market 2022 Jul 29, 2022 - 08:51 PM GMT

This clip from March 2009 illustrates what it's like at a market bottom, that had analysts stating at Dow 6490 that the Dow was nowhere near a bottom which was at least another 20% to 25% further below.

AT THE BOTTOM

The bottom will ALWAYS BE some distance away in terms of price and time, where the rally off the bottom will always be seen as a dead cat bounce to SELL.

Where do we stand today? We'll no one, not even I think today's rally is off THE bottom! But I know enough to know that -

a, AI tech stocks have already deviated greatly from their highs so it's going to be a tough call to expect further new lows in most.

b. That many if not most will likely outperform the indices going forward. Yes a few are still expensive such as Apple, Microsoft, Nvidia and maybe AMD that carry a risk premium for further downwards price action to fair value. And then there is Amazon which whilst expensive IS DOWN 46% which offers a bottom picking cushion of sorts.

c. That bear market bottom will always be seen by virtually all as being further away in terms of time and price.

d. That the rally off the bottom will ALWAYS be seen as a bear market rally to SELL into rather than to BUY the rally as it will be taken as granted that it is just another BEAR MARKET RALLY! Whilst everyone waits for CAPITULATION to happen.

The net result is that MOST will SELL the rally off the bottom rather than buy it, that is human psychology as I covered in my last article, Investors will be relieved that they can finally cut their losses and SELL the RALLY as the dead cat bounce bear market rally mantra will persist for probably well over year AFTER the market bottoms! As most who failed to buy or worse sold are convinced that new lows remain inevitable given dire fundamentals just as was the case during 2009 and into 2010 for which investors will have plenty of media queens to turn to reinforce such views as clueless journalist regurgitate tripe of imbecilic academics all the way to NEW ALL:TIME HIGHS!

Nouriel Roubini Stock Market 20% Drop Forecast, Time to Buy?

July 2009 - Back in July as the Stealth bull market corrected, Nouriel Roubini re-appeared with another bear market call - Global Investor - Market bear Roubini sticks to dour forecasts

"Macro news, earnings news and financial shocks are going to be worse than expected and that's why I believe this is still a bear market rally," he told BNN

So one needs to get into the right mindset for which one needs a PLAN and then to FOLLOW it. My plan was pretty simple, to have a mountain of cash on account Mid Jan, and then to gradually accumulate during the bear market of 2022 as individual stocks trade to new lows with buying levels based on valuations acting as guide posts along the way. For if one bought on the basis of the indices then one would have bought Apple at over $160 instead of below $130 as I warned barely weeks ago given that the stock price was not falling along with the rest of the market early May. That's an example of what happens if one follows the indices as unfortunately many do! Of course in the long-run it won't make much difference if one bought Apple at $160, but it is a much lower draw down risk to buy at below $130 than above $160.

Stock Market Trend 2022

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Your analyst BUYING the panic selling falling knives.

By Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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