Barry Ritholtz: S&P oversold

Extracts from here (dated Dec 7th 08):

"Over the past 100 years, we’ve only seen the relative strength of the S&P 500 drop to this level five times, and each time, it has been a major buying opportunity, although not necessarily a major bottom. If you look at 1929, it was a low but it wasn’t the low, and there was a bounce. It was the same thing after Sept. 11 — from Sept. 21, you had a 40% bounce in the Nasdaq before you went down to make all-time lows."

"There is a significant rally, 20% or 30%, waiting to happen. But there’s also the possibility of a lower low, as we get deeper into the recession, if things take a terrible turn for the worse."

"The most important [rule] is that we always have a stop-loss...we use trailing stop-loss...When the market starts heading south, we get taken out."