Picking Bottoms

Everybody wants to be a hero and pick the bottom of a meltdown market, and many great investors are renowned for making killings doing so (and from picking tops too.)

We prefer not to do that, given the way we work, but nonetheless for those of you with itchy fingers, here are some handy technical signs to watch for, from Oppenheimer Chief Market Technician Carter Worth appearing on CNBC (conclusion is not yet) :

1) Persistent Weakness
2) Definitive New Low
3) Must Close On The High Of The Day
4) Massive Volume

(CNBC video here.)

I agree.

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And from a smart broker here in Asia, where yesterday saw HK net sold only 5:4 on their books... quite surprisingly close to balanced, given that the HSI was down 5.2% with the HSCEI (H-share index) down 7.2%. Bottom, therefore, in sight?

Sure, the buying had a large element of short covering to it and the sell pad left a lot to be completed (higher up). Many in the room take the above facts to be very bearish. They say we need to see more puking. We need to see more "bid wanted" screams. And we need to see more aggressive buying from Long Only customers, especially into distressed pricing sessions. I totally agree. Grinding lower. Rallies will tend to be sold. (Edited)