I’m trying to find a chart to be helpful in trying to determine when the selling in the stock indexes might come to a climax. The advance/decline ratio isn’t much help as it’s been declining for a very long time. The widely followed VIX is at a record, hitting almost 65 today. It has blown way past all the levels where technicians thought a bottom could occur. Same with put/call ratios, new lows, volume climaxes, overbought/oversold oscillators, previous support levels. Well, there is one level of support quickly approaching on the S&P, which would be a cluster of lows from late July 2002 to late March 2003. The rapidity of this decline makes me wonder if the momentum to the downside is currently too strong to expect any support to hold. Bearishness seems at an extreme right now, but how does one measure it? Conventional and well tested measures of extreme bearishness don’t seem to hold, and are surpassed like a hot knife through butter. The trend is down, but deeply oversold and getting more so by the day. From a technical analysis point of view I really don’t have a clue. Sometimes technical analysis just isn’t much help. There will likely be a violent upside rally that could happen at any moment. But picking bottoms can be a messy business. Most likely any rally will be hit by more waves of selling, or at least many retests. Hopefully the double stochastic will get out of oversold levels and the market will become more of a two sided affair. For now it is interesting, if somewhat depressing, to watch.
I found this quote, which I have seen many times in the past, I think first presented by one of my many left wing college professors.
“The American people will never knowingly adopt socialism. But, under the name of “liberalism,” they will adopt every fragment of the socialist program, until one day America will be a socialist nation, without knowing how it happened.” – Norman Thomas, U.S. Socialist Party presidential candidate 1940, 1944 and 1948
I think it is appropriate to present now, as the socialist movement is finally coming into reality in this country. It accelerated with the bailout moves. And if the election polls are correct it will be in full swing come January. Hopefully I won’t offend any readers by presenting the above quote, but we still have free speech, although we won’t if Nancy Pelosi has her way and can get the so-called “fairness doctrine” through. It is a scary time with perhaps the most important election in the history of this country just weeks away. Those who want socialism will be happy, at least for a while. Someday they may regret their choice and the result of this election. I hope I’m wrong. And I hope McCain starts to fight and can somehow get the facts out despite the main-stream-media’s one sided bias.
After writing the above I found another timely quote by Norman Thomas. I don’t know the year he said this, but I believe he died in 1968, so wasn’t too recent, but is very timely.
“The difference between Democrats and Republicans is: Democrats have accepted some ideas of Socialism cheerfully, while Republicans have accepted them reluctantly”