Question from Flint:
If this is an example of a dead cat bounce then what would we look for in a real bounce… .
The best example I can find is the mini-crash of October 1997. The Dow gapped down sharply following a fall in Asian markets, but met with strong buying support the next day. The total correction of 12% did not reach the 6400 level from start of the year. The long-term rising trendline was not tested and 63-Day Twiggs Momentum declined but failed to break below zero. Volume doubled in the week following the crash, confirming buying support.
The 2011 crash is not specific to one region as with the 1997 Asian crisis. The index had not made much progress for the year and the fall of 17% broke well below the starting level of 11500. The long-term rising trendline was breached and 63-Day Twiggs Momentum dropped sharply below zero. Volume doubled in the week following the crash, as in 1997, but this is a completely different scenario: it would take similar volume for 4/5 successive weeks to stop the bear market in its tracks.
Great analysis as usual Colin.
Preferred your older format – all in one ‘html page’ – much easier to save and re-read when off-line or refer to later without flipping thru’ multiple links
Comment by mSquare — August 16, 2011 @ 4:51 pm EDT |
mSquare, Thank you for the feedback. Please try the home page link. All latest materiel is listed on that page. Regards, Colin
Comment by Colin Twiggs — August 16, 2011 @ 7:56 pm EDT |
Great analysis as always. Enjoying the new format, keep up the good work
Comment by Gavin McMaster — August 16, 2011 @ 10:02 am EDT |
Thanks for your insights in such a chaotic time. It is hard to believe that there isn’t some form of organised action that creates the volatility for the benefit of the “organisers”.
Comment by Garth Wenck — August 16, 2011 @ 7:29 am EDT |
Good comparison. Don’t forget that 1997 was a full bull market too. This time IS different.
Comment by James — August 16, 2011 @ 3:47 am EDT |
GOOD WORK KEEP IT UP
Comment by toms — August 16, 2011 @ 1:39 am EDT |