Comments on: Another Bull Market Correction?

by: Sentiment Overview For Week Of August 24th 2007

Fri, 24 Aug 2007 22:48:20 +0000

[…] Eventhough I still think of this as another bull market correction, I bemoaned the lack of extreme negative sentiment and real fear in the market. Now, this final puzzle piece seems to be falling into place. […]

by: Keith Shepard

Fri, 17 Aug 2007 13:04:33 +0000

Admittedly, buying a Fed Rate cut dip and not waiting for the trend to sat in … is very profitable.

by: Keith Shepard

Thu, 16 Aug 2007 23:05:22 +0000

No, I don’t eyeball it really. I keep my analysis of the broader market pretty simple by watching volume and a couple moving averages … waiting for a thrust up and a test of the initial pullback, support or resistance. Just basics. In the spirit of Stan Weinstein.

I’m just not a believer in buying dips for the sake of a dip. I’m not saying I’m right; just that I generally don’t find them appealing. I’d rather everyone bottom pick and begin pushing the market forward raising OBV, price, testing key levels, etc…

I’m happy getting a piece of the pie … even if it’s third to the last and has a couple of hairs in it.

But as I said, you made an excellent point: why quit what has been working? Buying the dips (or corrections) in this bull market has paid well … plus, you were the first person I read (or even heard) that mentioned the 10% level. I should keep track of those statistics, but I never got into the habit. Price hypnotizes me sometimes and I get a bit pig-headed.

by: Babak

Thu, 16 Aug 2007 21:58:26 +0000

Keith, I leg into the downturn. How do you define or know there is an uptrend? just eyeball it?

Aaron, I suspect seasonality will come into play… especially if the Fed wakes up and shaves a quarter point off the interest rate.

by: Aaron

Thu, 16 Aug 2007 18:04:02 +0000

I think it is rather likely that this is indeed just a correction in the middle of a bull market, but it certainly is shaping up to be the biggest one yet. There may be some more on the downside for the rest of the summer, but I would think that this fall should see a rally at least by November.

by: Keith Shepard

Thu, 16 Aug 2007 15:28:18 +0000

“I’m assuming that we are witnessing a fifth correction and my reasoning is that it makes sense to continue doing what works, until it doesn’t. If you buy every correction in a bull market you’ll be wrong once - at the top. I’d rather have the market prove me wrong and deduct that tuition from me than to automatically think “This time it is different.” ”

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You make a very good point (from the quote above). That’s definitely something to keep in mind. Though for me, I don’t buy on dips. I’ve always waited until I see the beginnings of an upward trend.

Setting aside market statistics and looking at pure price patterns only, I really don’t seem much upward encouragement yet (sans a cover rally). We may just enter a phase like we did in 2004 (sideways grinding, slightly downward) as the credit fears wring themselves out of the market.

Or we could have a mini crash like we did October 27, 1997.