I think we are probably within days to at most a week to 10 days of putting in a bottom. Granted I don't think this will be the final bear market low. That won't come for at least another couple of years.As of today we are now on day 36 of the current trading cycle. The average duration is between 29-43 days so this decline is getting long in the tooth. Especially since the last cycle ran long at 45 days. Usually a long cycle is followed by a short cycle.
Either way we should be close to a bottom. A test of the 02 lows would seem to be in the cards at the very least. However that's not what I'm interested in. No I'm interested in the bounce out of this bottom. I suspect the rally is going to be amazing to say the least. I fully expect the market to test the 12 month moving average. That could mean a rally back to the 1200 level in very short order.
I imagine almost everyone will take that as a sign that the worst is over. However I really doubt that will be the case. We aren't dealing with a "normal" bear market. What we are seeing is the credit cycle coming full circle since the last bottom in the 1932 depression. This is commonly known as Kondratieff winter. This is the period where excess debt gets purged from the system.
Since we just saw the largest credit bubble in history I don't expect that we will accomplish this purging in only a year. It took several years back in the 30's and that was a much smaller bubble. Once the coming rally runs it's course I fully expect the market to roll over into the second bear phase. This phase will last much longer and probably result in much more damage than what we've just seen.
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