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Monday, February 02, 2009

2002-2003 Bear Market Bottoming Process

Here is a chart of the 2002-2003 Bear Market Bottoming Process which made three bottoms between July 2002 and March 2003.

Click chart courtesy of Stockcharts.com for full size image

RSI, relative strength index, bottomed first on high volume at B1=797.70

Price bottomed next on lower volume with a lower closing low on October 9, 2002 at B2=776.76.

The start of the war in Iraq caused a third bear market low at B3=800.73. B3 was about 3.1% higher than B2.

Triple bottoms are rare and can proceed very powerful rallies.

In 2003, the S&P500 gained 28.5% (chart) while my "newsletter explore portfolio" gained 77%. My stocks have done their best early in the bull market cycles.

I hope my newsletter explore portfolio repeats that exceptional performance if the market does as well as Brinker seems to be indicating. Then again, Brinker had a gift horse buying opportunity when the S&P500 was at 1450 and he's been fully invested since the very top so you have to take his predictions with a grain of salt.

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