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Editor's note: This column was originally published on RealMoney on Jan. 22, 2008 at 9:15 a.m. EST. It's being republished as a bonus for readers. For more information about subscribing to RealMoney, please click here.

Why is everyone so afraid they will miss the exact low in the market? In fact, I find it amazing that everyone wants to know whether it's time to buy, rather than asking whether they should sell some more.

As I look back over my notes from the past week

Jan. 14-18, I see very few questions about what the downside measures to. Instead I see everyone waiting for the

jumpy VIX



Well, I would point out that we no longer need a jumpy VIX -- now we need a surging VIX. Friday

Jan. 18 might have looked relatively mild on the

major averages in terms of a decline, and so many tech stocks were up. That must be why the VIX sank. There should be fear even on mild days, but there is not.

Cramer: We're Headed for a Bottom - Here's How to Play It

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But now we have overseas markets plunging. It wasn't long ago that all those pundits promised that the U.S. would not affect the rest of the world, and surely not the wonderful and fabulous Asian markets. Hah!

About a month ago, I even discussed

the emerging markets and the widespread belief that we could decouple from them. I pointed out the diamond pattern in the chart of the

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ETF, which tracks the emerging markets. I didn't believe we could decouple from them then, and it seems they finally decided their time has come.

We had a day off, and the rest of the world worked -- and the rest of the world chose to play catch-up to the U.S. That in turn is causing some panic in our markets, or at least a whole lot of fuss among market participants; my inbox is full, my instant messages are popping and my phone is ringing -- and it's a holiday (I'm writing this on Monday

Jan. 21). Why isn't anyone taking the day off? Because they woke up and saw the overseas markets!

So can all of this lead to capitulation? Sure. I've gone back to refresh my memories of the crash of 1987, and I note that we plunged just over 20% in one day. I've also gone back to 2002, and once we broke the spike lows of September 2001, we plunged almost 20%, too.

In 1987, we retested the crash low one week later (point B). Six weeks after the crash, we retested it again (point C).

In 1987, we had a

specialist system that still worked. Now we have a specialist system that the authorities have slowly dismantled. In 1987, we didn't have ETFs, nor did we have them in abundance in 2002 the way we do now. So the comparisons might not be the best to use.

However, in 2002 it took nearly two weeks to plunge that final 20% after we broke the lows. In 2002, the Investors Intelligence readings also refused to show too many


Now take a look at the VXO


, a volatility index, from 2002. I've boxed off the timeframe when we broke to lower lows on the

S&P 500


. That's the move from 35 to 40. But look, we ultimately went to 55. So as I said on Friday, the VIX is just one indicator, and it is not going to ring a bell all on its own.


Click chart for larger image.


Here is the oscillator from 2002 as well. Note that when we broke down in early July, we were essentially hovering the way the oscillator is hovering now.

We are not yet maximum

oversold. The VIX has yet to surge. The Index

put/call ratio has barely scraped together one day over 200%. The Investors Intelligence readings continue to show too many bulls.

So, based on the traffic in my inbox on Monday, yes, we're headed toward some sort of capitulation, but the '87 crash as well as the July 2002 low have shown us that they always get retested.

Overbought/Oversold Oscillators

For more explanation of these indicators, check out The Chartist's


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Helene Meisler writes a daily technical analysis column and Top Stocks. For more information,

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. Meisler trained at several Wall Street firms, including Goldman Sachs and SG Cowen, and has worked with the equity trading department at Cargill. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback;

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