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This is the main gateway for significant events in the stock market. The conclusions I draw from this analysis are two:
- If a major shock occurs that takes price down dramatically, buy soon after, perhaps within a week. This
occurred on 9-11 and Black Monday (the 1987 crash). Early entry means you get in near the bottom of a fast recovery.
The downside is, the recovery will be like an ugly double bottom or
a dead-cat bounce -- a bounce upward with the second low above the
first. That is fine so long as you get in near the low and not near the top of the bounce.
- For bear markets, like the 1929 stock market crash and the 2000-2002 bear market, then you have to call the bottom correctly
before adding new positions. Taking your time before jumping in may mean missing a few points of the rise, but it helps
avoid markets that climb some before continuing down.
This page is dedicated to Ronda Palm who gave me the idea... Thanks Ronda.
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Copyright © 2005-2007 by Thomas N.
Bulkowski. All rights reserved. Moderate: a guy who makes enemies left and right.
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They pay for the referral on most items and that helps pay for the cost of this site.
