Bottoms Up in the Stock Market
The stock market and the major Indexes have taken a terrible beating over the past several days. Investors are at the point of throwing in the towel, which in my estimation would be a mistake now, because our Indicators and the Japanese Candlestick price formations in the Dow Industrials Index and in the S&P 500 Index suggest that prices are coming into a low and that an upside reversal is due. Furthermore, the Candlestick formations of the Russell 2000 Index and of the S&P SmallCaps 600 Index suggest that, in those Indexes at least, the turn has already come and that their prices are in line for a substantial upward correction. So in that regard, the Russell and the 600 may be leading the pack.
I think that the correction which is in store could be quite substantial. This will not equate to a reversal of major trend, which remains Down; but its imminence ought to be enough to dissuade disillusioned shareholders from selling now. The right time to sell, unfortunately, was a year ago; but that's water under the bridge. The correct action right now would appear to be to wait for the correction to take hold and then to assume a selling stance as near to the top of the expected crest as possible.
In particular now, the Russell 2000 and the S&P 600 assumed Candlestick "piercing" patterns last Friday right at the bottom of the low. Prices "pierced" quite substantially the price bars of the previous day. I take those moves as strong suggestions that the move will continue upward into a meaningful upward correction until prices finally crest and then turn down again in the major downtrend.
William Kurtz October 12, 2008
Related Tags: technical analysis, reversal, forum, instruction, candlestick, chart, pattern, charting, doji, formation, shooting star, investment newsletter, japanese candlesticks, market letter, evening star, elliott wave, morning star, candelaabra
Author is an experienced investor; retired corporate CEO and atty; creator of "Candelaabra" system of technical analysis for all financial markets; publishes thrice-weekly investment newsletter at http://www.candlewave.com
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