Thread by @TihoBrkan

I received a some messages regarding how to see a bottom.

There are many technical indicators I use, plus you need to be “lucky” to buy around it.

But the most important for me is when I notice the market stops making new lows on bad news!

That’s when you’re close...

What we want to see is the end of panic (usually a peak in the $VIX index). That is the first sign.

Markets start a relief rally, followed by a re-test of the low. This is a base-building period when you should be looking for positive divergence in breadth & credit spreads, etc.

There is nothing wrong with an undercut of the initial low, which happened from Nov 2008 low, until March 2009 final bottom.

Sometimes you just get a re-test of the low, too.

During a base building process, bad news will keep coming, but the price will become more resilient.

Various strong businesses will emerge as stock market leaders, refusing to sell off on further bad news.

Weak sectors will still suffer (Technology in 2002, Financials in 2009, etc) and drag the market lower, but most stocks will start acting healthy again.

All of this takes time & experience. Every situation has similarities to the past, however, every bottom is different.

Be patient, watch the market carefully, let it give you clues. Keep an extremely open mind & respect the price above narratives.

Take it day by day!