Capitulation

[sam76]

Will it come?

Has it come?

Does it matter?

Is it needed?

Is the sky falling?

Has it fallen?

Is it still blue?

 

[sam76]

pic for effectiveness lol

 

[korrupt_1]

lol

it's going to hell!!!!!!!!!!!!!

 

[korrupt_1]

hey i still had a morning glory so the world is well

eww.... we did not need to know that buddy

 

[nunthewiser]

eww.... we did not need to know that buddy

LOL sorry will see if i can delete post

 

[sam76]

LOL sorry will see if i can delete post

I thought Nuns were banned from that sort of stuff?

 

[Sean K]

LOL sorry will see if i can delete post

No, maybe add a picture to really throw us off our wheeties...

 

[gfresh]

looks like it...

 

[gfresh]

or seeing as you wanted something crass kennas

 

[sam76]

Is today the day???

not looking good...

 

[nunthewiser]

coming soon m8

 

[sam76]

Let's just get this over and done with.

Evertime I look at a stop light I get depressed.

lol

 

[sam76]

Let's just get this over and done with.

Evertime I look at a stop light I get depressed.

lol

Some of my best work and not one comment - sheesh!

So did we have capitulation last night?

Some say yes some say no.

Buyers came in (IMO) and volume was up?

Something about a "V" on the T/A POV or something???

 

[skyQuake]

Unlikely we'll see a V shaped reversal. Most markets have gone parabolic, the bounce will be sharp but not and smooth V. (nor will it be nice and long)

 

[amory]

No, maybe add a picture to really throw us off our wheeties...

good to see you've got a sense of humour, Kennas! one will have to bear that in mind.

 

[sam76]

2350 GMT [Dow Jones] S&P/ASX 200 may have seen "final capitulation" selling on Friday, according to Goldman Sachs JBWere. "Value was very strong (especially when you consider the hedgies are absent) at A$6.5 billion - so there were plenty throwing in the towel," says broker. "We saw possibly a final capitulation, but then again it's irrelevant what we do here..." Says a big rally in U.S. markets would have a major positive psychological effect. Adds, retail investors seemed to be panicking or hit by margin calls, on Friday. Index last up 5.7% at 4186.4. (DWR)

 

[amory]

maybe one should give this market the benefit of the doubt. that rubber-band may have been stretched too far, a decent rebound is within the realm of possibility ... notice I'm not saying probability, not yet anyway.

nice to see BHP, the old bellweather (opened at 28.44) touching 30.00 again. a little bit of optimism please!!

 

[amory]

well there's your rebound ... nothing aggressive at this end of the world, on chart mostly just making its way back to neutrality ... leaving serious decision-making very much up in the air ...

trust the Golds to spoil the fun, but don't they always!

anyone still doubtful about the Dow's influence on our market ... sure waiting what the Dow will do tonite & wouldn't you all like to know! sorry haven't got my crystal ball handy, I'll have to wait till tomorrow morning like everyone else.

 

[sam76]

They say that the bottom of the market is total capitulation, what factors to look at to understand whether the market has stopped falling.

What is a bear market?

Generally a bear market is one where the market has decreased by more than 20%.

With the Australian market down 36% since the highest point for the market which was reached 1st November 2007, the Australian market has been in a bear market for the last 11 months.

How does it end?

The end phase of a bear market is capitulation. Capitulation is when investors give up on stocks. Generally the view is that stocks are a bad investment and there is mass selling over a short period of time. The problem this time round is that the media is full of talk of capitulation which in itself indicates that total capitulation hasn't come yet. When real capitulation arrives, few will recognize it and ring a bell.

Volatility is another indicator of the end. The Volatility index or VIX index on the Chicago Board of Options reached an all time high last week indicating extreme volatility. Extreme levels of volatility are usually associated with turning points in the market and not in trend continuation.

Most brokerage houses are taking a cautious wait and see attitude.

What can I look out for?

Capitulation or the end phase of a bear market usually involves extremely high volume and sharp declines. Panic selling and capitulation usually signal a bottom of a bear market. Talk of people stashing money under mattresses and generally a flight to safe assets such as bonds and cash. It's when there are no sellers left in the market and only exhaustion. The only problem is that it is very hard to pick the bottom.

What is it time to do?

With many market watchers calling the bottom of the market, it's time to be increasingly cautious. It does look like we are in a bear market rally with a potential gain of 20% or greater but the long term trend still remains bearish. Total capitulation hasn't happened yet. For that, you'd have to have exhaustion. For most people, it's hard to know where the bottom is. One fact is that prices are at very low P/E's so perhaps for the very brave it's time to start accumulating. Just don't expect the bumpy road to be over.

Australian market perspective

Our markets down 35% in the past year but things need to be viewed in perspective.

From the start of the Bull Run in 2003 to the peak in 2007, market increased by 150% and that's not even including the dividends. If you include dividends then that figure rises to 200%. So far this year, the market is down 30%. The best thing is if we have seen a bottom and you bought in at the bottom, by the time the market gets back to the Nov 2007 level, the market would be up by more than 70%.

 

[nunthewiser]

when the sellers stop selling , when the buyers stop buying , when the investors/traders/punters throw there hands in the air ........... then we have hit that magic C word