How to spot this market bottom?

2009-02-15

 

Real quick. How many days DOW close below 8000?

 

Dow closed under 8000 for 4 days in a row, the longest streak since the last 2002 bear market low. At 7850 of last Friday close, it is lowest level since last Nov 20 low. This doesn’t bode well for the venerable index.  It could draw some cascading selling in the index and eventually below last Nov 20 market low. The $64,000 question is how to spot the upcoming market bottom?

 

While DOW is on the verge of breaking its bear market low, One curious thing happened in the recent market action is the so-called tech leadership stocks, the AAPL/GOOG/AMZN of the world. They held up relatively well compared to the rest of the market. As a matter of fact, AAPL is just 2-3%  below multi-months high it reached last week. This is in stark contrast of its action of last Nov market low, when it also made a new low in tandem of the market.

 

My guess is that this wave of selling led by DOW is going to catch up with the tech leadership stocks. If they still continue their behaviors in the recent past to hold up in the most of the selling process, they will eventually buckle under the last panic selling stage and go down with the rest of the market.

This is probably a good "tell" that market is close to the bottom. Until that time, we shall wait and keep out powder dry….