Danger zone may be over for stock markets
Posted by Frugal on March 25th, 2008
Just a short message.
You may consider getting back to the markets when the markets pull back from the coming earning announcement season.
Today since it’s down a little, do some light pecking if you will.
There is still a possibility of going even lower this year as suggested by BillCara.com. But the chance of that happening seems to be not big in my personal opinion (as long as this rally doesn’t go too crazy and greedy).
This is for intermediate horizon only. Longer term, the markets should head down still, but just much later (not this year, but may be next year).
EOM.
Frugal
P.S. By “stock markets”, I mean the general markets as indexed by SPY or QQQQ or DIA. Precious metal or PM markets are entirely different. Energy sector may or may not correlate to the stock markets, although I tend to say that it correlates mostly positively, except at extreme prices of crude oil prices. In those cases, they tend to correlate negatively.
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March 25th, 2008 at 9:21 am
I’ll take the other side of THAT trade.
March 25th, 2008 at 10:31 am
Hey you just posted couple of days back stating you shorting the index by buying QID etc, within days time saying market is back up out of danger zone. Sounds not right..
March 25th, 2008 at 3:31 pm
There is nothing that’s really wrong. Markets broke support on the reliable head and shoulder pattern. Magically, it rose above the support again. So far, it appears that it was a head fake on the downside, which occasionally happen.
I’ve covered my shorts, but not my hedges.
And just an important note. No one is going to be right every time. And no one is going to be wrong every time either. You are welcome to take any bets. I’m just calling as I see it.
The most important thing about trading is the IMMEDIATE WILLINGness to admit that you are wrong and take action.
Best luck.
March 26th, 2008 at 9:05 am
I’m not a chartist, but the UK stock market did recently touch a very useful buying indicator. The dividend yield from All Stocks has really closed the yield on 10 year government notes, and if I recall correctly just exceeded it on 2-year bonds (called Gilts in the UK). This very often signals the end of a bear market.
Not sure if this relationship holds in the US, but might be worth investigating.
April 1st, 2008 at 2:40 pm
a bit of clairvoyance here, advising some “light pecking” a week ago. my question is why do you think the market is not likely to go any lower this year? especially since the whole subprime thing is not even close to being over?
also, could you suggest a specific way to buy physical gold/silver? a good dependable cheap way, preferably including the name of a couple of vendors. thinking of owning a few thousand dollars worth just to be safe. thank you.
April 2nd, 2008 at 8:32 am
The above is my personal opinion only. I think the sentiments are too bearish. And there is a lot of cash on the sideline. And yes, subprime is not even close to being over. But if these banks can drag a rally until 2007 October, which should have been down earlier like in March 2007, then I believe this time around with Paulson’s proposals and all the government intervention, they may be able to levitate the markets up for probably 9 to 12 months longer. Seems to be impossible, but if you don’t mark your book to the true value, shares can still trade positively, even though the company should be in bankruptcy. Remember that the definition of bankruptcy is when you run out of cash, not when your net assets go to negative.
On gold, I had a friend who bought from monex.com. There may be other good places, but I haven’t bought enough physical to comment.
Best luck.
April 2nd, 2008 at 2:36 pm
Noob See here for answers to where to buy http://investmiddleway.blogspot.com/2006/04/guide-to-investing-in-gold-and-silver.html
I was very pleased with Tulvings rates and delivery but it pays to shop around and not when everybody is buying but before that.