The Case For a Huge Snapback Rally

A little bit of it came a day sooner than i thought.

I think Thursday was capitulation day and stocks should stabilize. I predict we may even rally hard starting next week.

I think we are done selling. I posted the reason i believe that is the case at www.tradertim.blogspot.com Thursday nite/Friday early morning. I'll repost some of it here:

'The world markets are crashing and will likely continue for some time. The USA selloff is in sympathy to the rest of the world, as well as being overextended in its rising. The question is whether US market will follow them to the abyss. Even if it does, the USA correction will not last for more than 3 months. It may end up being very quick but very sharp.

On Friday, I think we go down early morning and go lower at the close and bounce on Monday.

AKAM, SBUX, WFMI have all bottomed at the lower bottom range. I have told my people to look into AKAM when it was near 42, SBUX near 29, and WFMI slightly below 40. I still consider them at bottom at current levels. A better way to put it is AKAM has bottomed at low 40's, SBUX has bottomed at the very high 20's, and WFMI has bottomed in the very high $30's.

-AKAM has major support at 41.
-SBUX has major support at 28. (It's at 27 now, but give it one more day to right itself.)
-WFMI has major support at 38.

-YHOO is also at bottom.
-AMGN already bounced off the bottom.
-DNA is at bottom.
-AMD is essentially at bottom.
-BRCM is at bottom.
-CSCO is near bottom.
-MOT is near bottom.
-DIS is near bottom.
-EBAY is 2 points near bottom.
-NYX has bottomed at 80.

etc.

So many decent companies are showing stock prices near intermediate bottoms that i don't think the market is headed that much lower. It would take an extraordinary worldwide event to precipitate a crash-like situation that could break bottoms for these stocks. Ben Benanke not cutting interest rates this year is NOT enough of a good reason for a bear market! Perhaps a severe global tectonic plate slippage, that causes the deaths of millions, might. Or maybe some big news coming from China might.

Very interesting dichotomy here. The traders are telling me we aren't done selling. The world markets collapse is telling me we not done selling. Even my astrologer is saying we're not done selling. Yet when i look at alot of stocks (that are not current leaders) they are telling me that we are done selling essentially as of yesterday. '


Those stocks above (and many more) are indeed at intermediate bottoms. Many of them were selling off weeks before the 3-day market plunge. This leads me to believe that Thursday was capitulation. If these stocks don't go down any further (and Friday's action confirms they likely won't), how can the market continue to go down? It simply can't. And if i am correct, we go higher from next week on. Will we get a huge snapback rally, in addition to Friday's?

Many traders believe that we will repeat last June's selloff, but the situation last year was that most of the stocks above were at their highs. Those stocks above are nowhere near last year's highs! In a bear market, we could definately go lower, but the last i checked we are NOT IN A BEAR MARKET.