Back in February 2009, with the markets plunging relentlessly day after day, after day…  I still recall how many traders were waiting in anticipation for some sort of crazy, panicky, high volume day to mark a capitulation bottom.  This latest market downswing took the DOW down nearly 30% in just over two months from 9,088 to a low of 6,470 on March 6^th, 2009.

Many traders whose market analysis and insights I respect seemed to be waiting for some massive “fireworks”-type event that would all but shout “THE LOW IS HERE”;   a sign that all the weak hands have most likely thrown in the towel, and that it was now time to BUY BUY BUY hand over fist.

Of course, Mr. Market will never make it quite that easy, even for its smartest participants to figure out what its current “jig” will be.  The DOW closed below 6,700 for several days before breaking out higher and closing above 6,900 on March 10^th, 2009 on a bit higher average volume.  It also marked the first day since this leg of selling began in early February that the DOW was able to close above its downward-sloping trend-line.  However, that super-charged high volume capitulation day we were all looking for and expecting to occur never materialized.  While in September and October 2008 the VIX volatility index hit highs just over 80, in February and March 2009 the VIX topped out in the low 50’s.  This peak was 35% lower than its earlier spikes, even though the market was now trading at lower price levels.

(read more...)]]> http://www.vlogolution.com/hot/2010-12-15-insights-to-identifying-potentially-lasting-market-bottoms/feed/ 0