Raymond James Investment Strategist Jeff Saut has an interesting idea that “selling stampedes” generally last about 17-25 trading days. By my count, the current one just completed its 19th day (Friday June 6 – Wednesday July 2).
Saut thinks today was day 31 as he goes back to Wednesday May 21. Therefore, he today recommended picking up some positions to trade a short term bottom.
I’m not ready to buy yet but I think we’re getting close. Here are some reasons why:
- The VIX started to move this afternoon, finishing up 10% at 26.
- At 1261, the S&P is real close to the 1257 intraday low it hit on March 17th.
- The “selling stampede” has been relentless pushing the S&P 500 down 10.1% in the last 19 trading days.
As always, I’m looking for capitulation, a day where the market sells off violently and fearfully, to provide an excellent entry to trade a short term bounce.
During the Summer ’06 selloff, the S&P got as low as 1220 (S&P 3 Year Chart). That strikes me as representing some kind of support and the 1220s would represent an attractive entry point for a trade to me.