Seesaw Action

 | Aug 22, 2011 | 12:13 PM EDT
  • Comment
  • Print Print
  • Print

The essence of bear markets is failed bounces. It is the cycle of hope and disappointment that crushes optimism and produces wholesale liquidation. Why even bother trying to buy this market when the slightest strength is overwhelmed by sellers?


Unfortunately, it is a process we have to go through to eventually reach a tradable bottom. The market has to discourage the bulls and push all the marginal buyers to the sidelines. It is only when everyone has sold and thinks that the stock market is dead for good that the stage will be set for a new uptrend.


The reversal this morning was a particularly good example of bear market action. We went pretty much straight down and gave back a nearly 2% bounce in a few hours.  Who wants to buy the market when you have that sort of action?


Some folks have been saying that it is a positive that we are still holding above recent lows. I disagree. I don't think this market has a chance of a solid bottom until we breach those lows and trigger another round of stops that are set there.  It is just too obvious for us to hold at this support level, but another leg down would produce the sort of washout that will set the stage for a bounce, especially if we have some sort of positive news.


Other than the miners that I mentioned in my prior post, I see very little to do here. I'm going to stay patient and just wait for things to develop.



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.