When Will Stock Prices Reach a Bottom? Members Mixed

This week’s Sentiment Survey special question asked AAII members how they will know when the current downturn in stock prices has reached a bottom. Responses varied. The largest group, accounting for 29% of all respondents, said they’ll know either after a bottom has been set or technical indicators reveal an upturn in the market. Several of these members said they will look at price action for clues. The next-largest group (16%) said that either they won’t know, they don’t know or that they’re unsure when stocks will bottom. Nearly 13% think that a market bottom will coincide with either a stabilization (the majority within this group) or a rebound in oil prices. Close to 10% are looking for signs of capitulation such as panic selling or headlines warning investors to be more cautious. Just under 6% of respondents are looking for a further decline in stock prices.

Here is a sampling of the responses:

  • “I don’t expect to recognize the bottom when it happens.”
  • “When my technical indicators begin to show favorable trends.”
  • “When oil prices stabilize or move up.”
  • “When there is massive selling in the market on a single day.”
  • “Wait for the market to make higher highs and higher lows.”
  • “There is no certain way to know. Timing the market is best left to psychics.”

Want to weigh in? Take the survey yourself and see results online at http://www.aaii.com/sentimentsurvey.

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