Was that Capitulation?

Stocks and Shares - Have we Seen the Capitulation?

If you have been watching the stock markets and CNBC TV you will know that what people have been waiting for is capitulation. Well it is possible that we saw the first stage of capitulation today in New York.

Why do I make such a bold pronouncement? Well, because it's not mine. Art Cashin, who has been working on the NYSE for many decades described in simple terms what capitulation should look like.

First he said he was disappointed with the rally after the 800 point drop on Monday, that was not the capitulation he wanted to see. But then he went on to describe what a classic capitulation looks like.

He said that the market needs to fall off sharply and finish at the lows for the day (which is what happened today in New York - Tuesday). That is stage 1.

Then the next day (Wednesday) the market needs to start the day by falling further. This fall should continue until about 11.30 NY time, after which the market needs to rally sharply. This would be a sign that the markets have turned and will be in an uptrend for a couple of months.

So we don't have long to wait to see if that is what happens. Art Cashin has lots of experience on the stock market, so it will be interesting to see a) if things pan out as he described and b) if it leads to a recovery for a couple of months. Thank you Art !

And don't forget, both Warren Buffett and Anthony Bolton have been buying recently.

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