Ok, the game of guessing the bottom is on again.
Now that the market have reached the low for the last two years and is at the verge of “official” bear market, will the market bounce from here, or, is there more room to fail?
Before we answer that million dollar question, we can look back the history of past bear market.
According to WSJ, the average bear market was down 31% from the high. The worst of the bear market is down more than 80%(great depression). So, depends on how severe this bear market is, we may see the beginning of the worst.
What could be the catalyst to reverse the market? One thing is the reduction of oil price. However, with speculation of oil rampant and statements from OPEC that price could reach 170, we may not see the high of the oil price just yet.
Sentimental wise, we are just see the fear reappear during the weekend, there are a flurry of news media calling the bear market, but, there is no panic, on the contrary, there are still a lot of hopes that the market will rebound soon (read the CBS market watch ). Also, the VIX is only in the low 20s. so, I doubt we will see a technical bounce soon.
To summarize, my opinion is that the market will continue downward drift, any rally will provide a opportunity to sell. My target was 11200 for the DJIA initially, now, I think we may even see market go lower than that.
Trade along the main trend is easier than count trade, so, we may still go “short” until the market says otherwise.
