“The bottom’s in!” So says Jon Najarian after some tough trading weeks on the street. He stopped by Yahoo Finance with three reason he thinks it’s time to get back into the market.
Flushing Out
Najarian says the market activity this week flushed out oil bulls and bond bears which is sign number one that the bottom is in. For good measure he noted “entire countries like Germany which had, I believe about a 4.5% - 5% move from bottom to top” add to the assertion that the great flush has occurred. He likened the moves to childbirth. “As the contractions get close chances are the baby’s getting close and the contractions were there in the market...That final push was what we saw with the flush of various hedge funds and very large traders who were on the wrong side for too long.”
Volatility
Unless you were on vacation or living off the grid for the last few weeks you know volatility has returned to the market in a big way. It’s just HOW big that has Najarian convinced stocks have bottomed. Using the VIX (^VIX) as a bellwether he says the “42% pop above the old high and nearly triple the lows of the year [we saw this week] was a pretty good sign that there was panic in the market.”
Correction territory
OK, yes, we haven’t technically hit the magic 10% number that signals an official correction. Still, as Najarian points out, that’s pretty tough to attain in the age of algorithms. Traders of that ilk were lying in wait for that 9.9% fall at which point the buy signal was on.
More from Yahoo Finance:
Fed times pep talk to stop wild week of market swoons
Gold takes center stage amid global rut
Buy the dip and focus on the long-term says Edelman