Buy Buy Buy - NO WAY!!!!To the left is the updated S&P chart through early this morning. A couple of points. First, the widely covered 200 Moving Average displayed on the chart, has prove to be of no value once again. It is just a line on a page, having no statistical significance.
Second, the market is clearly in a downtrend. I had warned here on May 10th of the bearish setup in stocks. That feeling has not changed. As you can see below, the commercials are not buying this dip yet. As a result, there is no reason, during a bad seasonal time, to even consider getting long here.
The market is extremely oversold on a short term basis, having had 7 consecutive down closes. As a result, a bounce could occur at any time. All that will be is an opportunity to get out. I would not recommend any new long positions at this time.
2 comments:
Chris, what do you think of that Zeal newsletter I sent you? They are really into technical analysis, with all that 200dma stuff. But they ignore the fundamentals, I think. They make a big deal of those lines, 50dma, 200dma. Why does any of that even matter?
I'm a long-term investor, and I don't agree with their long term view either. China is NOT the next big economy. This is a global economy, and now that the US consumer is tapped out and cutting back on spending, the export-dependent countries (ALL the Asian countries) will feel it too. As in 2000-01, their stock markets and worldwide commodities will plunge.
Fortunate for you, you can make money on short term price movements. Long term investors like me have to sit out the next year or two.
I did not read it in great detail. Sorry! I tend to stick to what I know. I am not an economist, I am basically a trader. I have very strict research that I follow, so that keeps me out of trouble generally.
These big picture Macro things about China may or may not be right, but I have no idea how to profit from them in the short term. They are not quantifiable, which is what I am interested in.
I have studied technical analysis for years, and without fundamentals incorporated into it, it is prone for erratic performance.
From what Rich and you say about Zeal, they must be sharp. The 200 day Mov Avg is widely watched by institutions, and they probably know that. However, even knowing that, I have not found a systematic way of using it for profit.
I think there is a good time to be in cash, and now is one of them. Dodging a selloff like this is like making a profit in my opinion. I have people calling me in a panic now. They did not follow my adice to exit, and now are wondering what to do?
A good buy spot should develop in the fall for stocks, and that will be our opportunity to make some money.
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