I’m going out on a limb and taking a risk. I’m stating the stock market bottomed yesterday, on the Ides of March. Here’s Three reasons why.
1. We are Oversold
The Overbought Oversold Oscillator is low. This reading goes back-and-forth like a heart monitor does. Notice in the chart to the right The Oscillator always bounces back.
When looked at with a chart of the Dow, you can see an oversold reading often coincides with a market bottom.
I feel when we look back at this market the bottom will prove to be March 15th — the Ides of March.
2. Leading Stocks Aren’t Breaking Down
The biggest reason I’m calling a bottom is the hot growth stocks aren’t breaking down. Sure most have corrected, but we’ve already witnesses top stocks like Netflix (NFLX), Green Muntain Coffee (GMCR), and Travelzoo (TZOO) turn up. I had to buy TZOO for clients yesterday because i felt the stock was going to take off and leave me behind — like NFLX — if I didn’t. NFLX jumped big-time yesterday, and you could tell last week the stock was around as low as it was going to go when it was $195.
3. Japan’s Situation has Little Affect on US Stocks
Japan’s situation is tragic. My heart and prayers go out to the people of that country.
Although our market was down on Japan’s nuclear reactor news, the Japanese situation has little affect on US stocks. Japan is known for electronics and automobiles, and I can say I don’t follow (or maybe have ever followed) a Japanese stock. Nissan and Sony might be Japanese stocks, I don’t even know because they aren’t on my radar.
I don’t mean to sound unsympathetic. but this will have little affect on our companies. In fact it might lead to better business due to rebuilding efforts. If iPads were being sold in Japan then those are likely ruined. Many will be replaced.
Bottom Line
The bottom line is I think we hit bottom. Since we are still in a correction I could be completely wrong. Still, the market’s oversold and due for a bounce and I feel the leading stocks will take off first. I think it will be a swift move, and I think within a week we will have rallied.
Disclosure: Clients of DavidSharek.com own shares of GMCR and TZOO.
