Think we are near a short term bottom
Posted by admin on March 2, 2009
As I have said in almost every post I have put on here. Read the disclaimer I am not a licensed financial adviser.
All of this being said if you still have money in the market, do not panic, I believe we are nearing a short term bottom. Now if you read some of my posts like the S&P 500 Chart you know I believe the market is going to keep going down. For the near term I believe we are extremely oversold and due for a bounce back up.
This is a short term call. As I have said the market is not going to do you any favors in the near future. As I said I believe you need to sell some of your holdings you have into rallies. If you look at the S&P right now the 200 day moving average is at 1077 and the S&P is at 700. The 200 day MA will keep moving down approaching the price, but you could have a 25% move up in the market before you run into the 200 day MA. Technically speaking prices below the 200 day MA is still a down trending market.
So yes I believe we are due for the market to turn and stocks to go up, but I expect them to not go through the 200 day moving average. I believe the US has begun to de-lever as people begin saving more than they spend which will not cause a lot of growth in the next 2-3 years. Look at the chart below and you can see how far up we can go.
See the large gap between the moving averages.
Please be putting new money into cash in your 401-K and IRA’s until the market makes a bottom and turns. We are all along for the ride now as the market is not making any sense in the valuations it is putting on some of these companies. Yes I would like to buy some things for the long term, but right now the rules are changing. With the administration spending $1.7 trillion between the stimulus and the regular budget we are getting ready to enter huge deficits and before long higher interest rates to finance them. All you can do is take care of yourself and your family. Use rallies to sell stock and get in cash and have some cash to invest when the economy and markets do turn up.
If you are interested in learning more about technical analysis check out some of the books out on the subject:
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