THE PRAGMATIC CAPITALIST » » IDENTIFYING BEAR MARKET BOTTOMS

IDENTIFYING BEAR MARKET BOTTOMS

13 May 2009 by TPC 8 Comments

Interesting read here from Lowry’s. I don’t have the data on how it relates to today’s market though I do know there were a high number of 90% up days in March. If anyone can shed some light on this I would be very interested in their thoughts.

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8 Comments »

E said:

the question you have to ask is, to what extent are investors disgusted by stocks (i am sure you are reader of Hussman's weekly commentary)

90% down days signal a revulsion to stocks

more than one signals more and more distaste for stocks

therefore, the more Lowry 90% days, the more stocks are sold and removed from portfolios and the more likely a reflexive move in the market

hence, one 90% day is not enough flushing, but 2 or more in short order are…..

however, although im not to savy with stocks i do believe this

that the massive global deleveraging has long long way to go….
and this undoubtedly will lead to lower equity prices….
however, due to mo-mo trading, the ease of online trading (“hey lets gamble, its only $9.99 to get in”) will add much vol and noise, so +/- 1,000 pts can be considered non-directional or the margin of error….

that being said….thanks for the post, this is currently on my top 3 blog/sites for commentary (Hussman, Zero Hedge and PragCap)……

no sense reading the verbal diarreah at minnyanville or seeking alpha…..

my uneducated “guess”….we test 6500, and fail…..say to 5800? then a massive rally “at some point” even to 10,000….good for the traders, but decimating to 401K's, baby boomers and those with high blood pressure

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# 13 May 2009 at 6:58 PM

E said:

oh, (damn no edit button), i give no time line for my “guesstimates”….otherwise, for sure i will be way wrong….i tend to be two weeks early

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# 13 May 2009 at 6:59 PM

TPC (author) said:

Nice thoughts. I wish I had access to the Lowry's data so I could compare this paper to today's market. I caught a lot of spam/hate mail for posting that reuters link with the FDIC comments. Apparently people don't like the potential idea that this crisis has a long way to go.

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# 13 May 2009 at 7:05 PM

Eric said:

Granville has spoken alot about the 90% upside and 90% downside days in his newsletter…he had some nice buy calls on BofA and some others in the 3's. He is fully convinced we are in a new bull.

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# 13 May 2009 at 7:09 PM

HedgeAccordingly said:

ALso take into not, the number of stocks breaking life lows during a sharp vol spike and massive selling pressure…. I think we have not quite bottomed yet, maybe next year. good post though, will follow

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# 13 May 2009 at 11:11 PM

ejack said:

Here's a report I generated for up/down volume 2008-2009, where “percent up” is the percentage of total volume for the day that was up. So 7% up = 93% down. Take these numbers with a grain of salt, I think they're right but I just threw this together right now.

Year month day up volume down volume percent up
2008 1 4 127330.00000 1524705.00000 7.7074638249189636
2008 2 5 142807.00000 1524592.00000 8.5646566898504797
2008 2 29 102281.00000 1625486.00000 5.9198375706909554
2008 3 6 116894.00000 1516222.00000 7.1577279262465128
2008 3 18 1844022.00000 185199.00000 90.8733942729747031
2008 6 26 122275.00000 1393282.00000 8.0679908442902510
2008 9 4 104265.00000 1185489.00000 8.0840997585586089
2008 9 15 159384.00000 1667781.00000 8.7230217303855974
2008 9 29 74983.00000 1813759.00000 3.9699969609401390
2008 10 6 167288.00000 1755204.00000 8.7016226855560387
2008 10 13 1669400.00000 144023.00000 92.0579478698571707
2008 10 15 80080.00000 1595207.00000 4.7800764883867660
2008 10 22 67192.00000 1460382.00000 4.3986085125826965
2008 11 5 113275.00000 1205123.00000 8.5918667959144355
2008 11 6 112664.00000 1432909.00000 7.2894648133734220
2008 11 12 74110.00000 1373152.00000 5.1207037841109626
2008 11 19 99899.00000 1571747.00000 5.9760858459267094
2008 11 24 1807270.00000 144596.00000 92.5919094855896870
2008 12 1 41073.00000 1558170.00000 2.5682776163472343
2008 12 16 1430178.00000 141994.00000 90.9682910012390502
2009 1 14 47910.00000 1357712.00000 3.4084554738044794
2009 1 20 99674.00000 1632640.00000 5.7538067578972403
2009 1 29 123384.00000 1294373.00000 8.7027607692996755
2009 2 10 122686.00000 1693643.00000 6.7546132886718210
2009 2 17 91669.00000 1518497.00000 5.6931397135450631
2009 3 2 84705.00000 1903813.00000 4.2597049662110175
2009 3 5 162325.00000 1727326.00000 8.5902105732751709
2009 3 10 2095977.00000 76125.00000 96.4953303297911424
2009 3 12 1685384.00000 137280.00000 92.4681674735442188
2009 3 23 1852168.00000 45736.00000 97.5901836973840616
2009 3 30 63389.00000 1443053.00000 4.2078619687980022
2009 4 2 1698460.00000 175716.00000 90.6243597186176752
2009 4 9 1692479.00000 130403.00000 92.8463279575968165
2009 4 20 69554.00000 1670298.00000 3.9976963557819861
2009 5 4 1606834.00000 99898.00000 94.1468256293313772
2009 5 13 142070.00000 1611117.00000 8.1035280320924123

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# 13 May 2009 at 11:25 PM

ejack said:

Oops, sorry, it didn't format properly in the comments. You can always cut and paste it into notepad and it seems to look okay. Basically in 2009, we had 7 90% down days up to March 5, then 6 90% up days with 2 90% down days in between, and then today was a 90% down day.