James Cramer on The 5 Signs of a Market Mega-Bottom
First: The pain makes the front page of the New York Times. If the market-woes stories aren;t on the front page, then simply wait; the bottom hasn't been reached yet. It is simply incredible how right this indicator always is.
Second: The Investors Intelligence survey of money managers. While you might expect that a good time to invest is when the managers are bullish, that's actually the worst time to invest. When the market managers show a definitive majority of bears, you have reached the bottom.
Third: Mutual fund withdrawals. Consistent, repeated outflows of several months in duration accompany all the big bottoms.
Fourth: The VIX, or Volatility Index. A reading above 40 in the VIX indicates a market bottom. Any reading below 30 indicates the market can't be trusted.
Fifth: Oscillator readings indicating the market is oversold.
Remember, this is a checklist. Anyone one of these indicators may not be definitive, but if all five have occured, it is officially a mega-bottom, and time to buy, buy, buy.
(from Jim Cramer's Real Money, pp 212-219)
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