The double bottom is in... will it hold?

A Double bottom formed with all USA indicators
Today, November 13 will reveal if this record downward leg of the bear market is over. Every USA index has repeated the low again for this year. This is about as low as it can go and still bounce with a perfect double bottom.

Hank Paulson lowered the bar again on American confidence in the Bush administration. After President Bush… with white knuckles grabbed the microphone last month and told the world his $750 billion package had to be passed immediately to save the world, Wall Street's Hank Paulson said yesterday he could not figure out how to unscramble the Wall Street mortgage securitization mess and would use some of the money to try to unscramble the credit card mess (for which he knows know even less). Apparently the only money spent for certain on the mortgage mess was to cover a few more lavish Wall Street retreats and some critical Wall Street executive bonuses.


Hence that news yesterday from Paulson was enough to make the market hit the bottom for a second time in two weeks. If only President Bush could get Paulson and Bernacke would stop opening their mouths the economy might stop imploding. If we could get them to hire someone with smarts we might be able to get the economy turned around. If this bottom does not hold today it will likely trigger sell signals and be in free fall again.


Two of five indicators we use have gone red now but the new spiral index says we should continue buying into the market slowly in this price range. This index has windows for buying and selling. The window could stay open for several weeks of buying and then close with a second confirmation that we should hold.

It could also be possible for the signal to reverse itself without ever issuing a closing buy confirmation although that has not happened in over a year. That would be called "whipsawing." That would be a reversion to our original position of staying on the sidelines with cash.