If I've heard it once, I've heard it a hundred times. "Has the market bottomed?" CNBC commentator, Mr. Mark Haines, believes it bottomed last Monday. His colleague, Mr. Joe Kiernan, isn't so sure. Both of these gentlemen have logged thousands of hours watching the market and listening to stock market experts present their views, and yet they can't agree on whether or not the market has bottomed.

Of course they can't. Neither of them is paid to interpret the market and they don't have the tools to help them do so. To make matters worse, they are required to listen to an endless parade of ill-informed, biased guests who do little more than confuse everyone. So we can't pay much attention to CNBC. We need a fact-based system to analyze the market and one that has been shown to work. Fortunately, we have one.

Last week I said we were going to let this downturn play itself out and watch our Market Timing Indicator, MTI, and Buy/Sell Ratio, BSR, very carefully. Now if one looks at a five-year display of our Market Timing Graph, they could easily see that the MTI goes down to or below 0.60 at the bottom of every major downturn. It hit 0.69 last Monday. That isn't low enough to make me feel comfortable that we have seen the bottom of this downturn. Furthermore, I have stated on a number of occasions that a downturn is essentially completed when the BSR goes below 0.20. It closed at 0.38 last Monday. This, too, is not low enough to say the bottom has been reached.

Ah ha, you say. Everyone has gotten bullish since Monday and stock prices have been moving sharply higher. What do you have to say about that, smart guy? Well, no downturn goes straight down from peak to valley. Just look at last May, for example. The Price of the VectorVest Composite fell sharply for eight of eleven days before rebounding. Then it fell for seven straight days to the low point on June 13th, when the BSR hit 0.10. Similar patterns have been seen in virtually every major downturn in the past. So I'm not going to feel comfortable going long until I see the BSR go below 0.20. It's the key to Calling A Bottom.

P.S. Mr. Gordon White will illustrate how to call a bottom by using the Market Timing Graph in this week's "Strategy of the Week" presentation.