It's been clear for some time that Japan's problems are not getting any better. A good example of true market capitulation was 1998. All of this led to the nervousness of the October capitulation phase. We haven't seen that yet this year. Currently, each new bounce still puts everyone at ease.
People have to be downright scared to get to a real capitulation.
However, because everyone expects market capitulation to get us out of this current bear market, I am in the camp that we just slowly grind out of it. Again, the market works opposite of what the majority expects or wants. Looking for Positive Signs Now that we understand how the market discounts future expectations and how psychology plays in the market, we can start to outline what to look for in the next couple of weeks. First, let's define what will create confidence in investors and traders. They want to see stabilizing business confidence, global turnarounds and a stronger economic growth rate.