“The ‘canonical’ market bottom typically features below-average valuations, falling interest rates, new lows in some major indices on diminished trading volume… and finally, a quick high-volume reversal in breadth….”
-John P. Hussman, Ph.D. (Hussman Funds, 5/22/06)
This strikes me as good advice, though I haven’t lived through enough bear markets to validate its truth. Given the recent market environment, a new low on diminishing volume is worth keeping an eye open for, though bets on such a condition are foolhardy. From my point of view, it is best to wait for a reversal to begin, rather than anticipating it due to a gut feeling.