"Media Calls a Bottom as Credit Market Calls for Panic (Charts) Tuesday, March 24, 2009 15:29
Much has been made (mostly by the mainstream media) over the recent rally in the Dow Jones Industrial Average. Many of the usual suspects, including those that have been wrong for the past 3 years, have been quick to call a bottom. We, as technicians, tend to pay little attention to CNBC, Fox Business, etc. Opinions have little or no value to us. Indeed, even our own opinions should ALWAYS be fluid and subject to change. We don’t tell the market where to go, we simply listen.
Our readers know that we’ve been pounding the table all throughout 2007. It was our view that all systems were blinking red, and that a MAJOR market collapse was imminent. We took heat for it through most of 2007, until the market topped in October 2007 and began its decline. Lately, the insults have turned into compliments.
Are we permanent bears? Absolutely not. Actually, the more accepted and praised that our views become, the more doubtful we begin to grow. We find that its best to stand away from crowds, and not in them.
The stock market most likely peaked yesterday, though the rally may continue to as high as 7,950 (DJIA) before exhausting. If the Dow Jones managed to pull a Friday close significantly above 8,000, however, we would re-evaluate. We feel that there is a MUCH higher probability of a decline than of an advance from this point on.
We would also re-evaluate our position if the DJIA managed to make a “higher low” at the end of its next leg down. That is, if the next wave of selling would end with buyers who are willing to pay more than they were on the previous low. The 2003 bull run began with such a higher low.
The credit market shows a persistent and elevated level of fear. There will be no bull market until the credit fear eases.
Housing depression continues to accelerate. There will be no bull market until this reverses or bottoms.