Major tops and bottoms in the stock market are never, in my experience, totally rational. Rather, they’re all about groupthink and about emotion. In today’s world, there’s also a pinch of rules-based, but still loony, AI action. (The AI stuff may actually be rational, but, if so, the aim may well be to get human investors’ animal brains into a higher gear.)

At any rate, the major US stock market indices–S&P 500 and NASDAQ–both made significant lows on January 24th.

We’re right back at those lows as I’m writing this. Typically, in Western markets, important lows are followed by a bounce that lasts six-eight weeks before petering out. The market returns to “test” the previous lows, usually dropping slightly beneath the previous low before turning around (for no apparent reason other than the charts), putting the previous plunge behind it and beginning a significant advance. Technicians (you can identify them by their buckskin jackets) call this a double bottom.

If my account is correct, the issue with current price action is that, less than a month after 1/27 it is coming too soon to be a legitimate test. Arguably, Russia and Ukraine are unusual factors in today’s markets. On the other hand, there’s always something different about every situation.

My guess: this is a test but not the test. Still, I raised about 10% cash as the Ukraine situation began to develop and put about a third of that back to work this morning. So I must be thinking that the remaining market issue is time rather than the market level. Of course, there may be another half-hearted bounce followed by a return to current levels again. That’s a triple bottom. I don’t ever recall experiencing one, though.

PS. For what it’s worth, I think that the violation of the prior low ends up most often being a buy signal in the US, and maybe Europe. In Asia, in contrast, where just about everybody takes charts much more seriously, it’s a strong sell signal.