Nearing an Important Turning Point

From a technical, sentiment and institutional money flow standpoint, there appear to be some important changes occurring in the market. I started pointing these changes out in my column on Oct. 10 when I said

Depending on how the market closes today, I may start to look for some long-side opportunities in the indices I have highlighted. The key will be for a big down opening this morning, and then we close higher at the end of the day. ... If that happens, it may be a good time to start small positions in these areas with protective sell stops directly beneath those lows.

That situation happened that very day, and I began to take positions in the index ETFs. I followed up in my column last Friday, noting that sentiment indicators were hitting historic extremes.

Technically the stock market has all the symptoms of being near a short-term bottom. If so, the next question will be whether it is a major bottom that holds for a number of years, an intermediate-term bottom that holds for six months, or a short-term bottom that holds for a few weeks. The first step is to determine whether a bottom has truly been reached.

Mr. Market that has managed to defy all the usual rules over the past few months, so I am not ruling anything out, but looking at my indicators and historical precedents, the situation is looking brighter than it has for some time.

I'm sure readers are still asking how I can be more optimistic when the news is so terrible. In fact, last week's economic news was the worst that I have ever seen, even topping the pessimistic outlook from September.

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At time of publication, Manning had no positions in the stocks mentioned, although holdings can change at any time.

Mark Manning, AAMS, is an Accredited Asset Management Specialist and Registered Investment Advisor with Butler, Wick & Co., where he specializes in wealth management. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Manning appreciates your feedback; click here to send him an email.