I got an email today from someone asking if they should buy one of the stocks I own. It is up big and I believe it will go up more. But I told the person I would not buy it now.
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Everyone knows that the best time to buy a stock to hold it for an investment is after a bear market ends and stocks are cheap. If you get in right as a new bull market starts or just as it starts and hold you can make a killing - and do so easily.
I just did this video update about the stock market and gold.
The truth is good stock market buy points come only about twice a year and hardly anyone can wait for them.
Tops often coincide with some sort of manic buying and wild speculative buying behavior among traders.
People are scared of missing out on further gains and are buying in a panic. Instead of buying weeks ago at lower prices they are buying now at higher prices
Right now personally I would not buy anything. I'm personally 90% invested so got some more money I want to use too. The problem is the stock market is now extremely overbought on a short-term basis.
We have come a long way from where we were just three weeks ago. In August and September CNBC scared their watchers by talking about "taper attacks." Economists on that network kept predicting that the Fed would cut back on its QE bond buying program at its September FOMC meeting.
Ike also creates a composite indicator out of six components to gauge the strength of the market. By using this indicator he has been able to accurately call market moves as he did in two other interviews I did with him.
I just did this interview with Dave Skarica of addictedtoprofits.net about the technical trading strategy of "box theory" created by Nicholas Darvas in his book How I Made Two Million Dollars in the Stock Market.
To deal with the stock market we have to simply accept the reality that it is in a correction and understand that corrections almost always end in some panic selling - and growing fear among investors who sell on a bottom. So yesterday's drop actually gets us closer to the end of this US stock market correction.
This morning the S&P 500 is poised to gap down 10 points. All of the news channels today are talking about a new war in Syria.
I got an email from someone asking me how I find the best sectors in the stock market. What I do is look to see which sectors hold up the best or even go up while the broad market pulls back. Once the market bottoms they tend to lead on the next rally. I use TC2000 to do this as I show in this video.
The US stock market has not gone anywhere the past week. It's overbought and could have a pullback at any moment, but I'm not bearish on it for a couple of reasons. First markets all over the world look like they are in a position now to breakout in the next few weeks and go higher, especially markets in Europe. They are consolidating and in a position to breakout and have a big run. Ireland has already broken out and is just floating on up.
As investors though we want to be looking for where the opportunities are. I plan on doing buying in mining stocks, shipping stocks, and maybe some European stock probably in August. Dips in markets bring buying opportunities.
Apple reported earnings last night and they beat analyst expectations. The CEO also said he was going to release new revolutionary products although he wasn't clear on what they would be. As a result people got excited and the stock is trading up 4% this morning. That's a big move for a stock everyone watches and many are obsessed with.
Not much happened yesterday. The S&P 500 closed up two points, however this was the eighth day in a row the stock market went up and people are simply getting mesmerized by it. There are many though that are not in the market and are now getting scared of missing out. They may have gotten shaken out during last month's dip or simply been cautious about the stock market.
According to their latest poll the number of bears in the market are 18.30% and bulls are 48.94% - this is the largest number of people bullish they have found since January 2012. The long-term average of this survey is 39% bullish and 30% bearish.
The us dollar is benefiting today from talk the past few days from members of the European Central Bank and Bank of London who made statements to the effect that they are not going to tighten monetary policy and in fact may even lower interest rates. The rise in the dollar is probably contributing to weak action in gold before the open today.
According to Reuters:
I have gotten some emails last week from people wondering if I am still bullish on Europe, because many of the European markets have pulled back the past few weeks and have actually underperformed the S&P 500 so far this year.
For instance I got this email:
What this bounce does is make it likely that the market will not put on a final end to this correction for a few weeks. My guess is two weeks. Fake bounces trap more people into a correction and provide fuel for further selling - thereby making them continue longer.
Once or twice a year you get it a correction like this and they make for great times to take new investment positions when they end. When you buy after the market rallies for awhile you eventually get dragged into a correction and lose money. But when you buy near a bottom you can hold and make money. The problem is few people can do it.
We are now in a full blown market correction. You can divide corrections into two halves. In the first part of a correction most people don't believe there is a correction. So when the market has up days they buy in and there is nothing that causes people to buy more than a DOW up 200 day. You see they look for bounces off support to buy and big rallies convince them. Then when the market goes down if someone tells them there is a correction they curse at them.
The drop is due to one simple fact - the US stock market made a peak a over a month ago and has been in a correction. Corrections end in panic selling and it is starting.
I am not convinced that the move of the past two days represents the beginning of a new big rally in the market that will take it through its May highs and beyond. I know its tough to doubt the market after it has a big up day and everyone gets excited, but I have not seen the things that typically come at the end of a correction.
I just did this podcast with Olivier Tischendorf of www.tischendorf.com/. Olivier is an independent trader based in Germany who has been trading the financial markets since 1999, using technical analysis and trading rules. In this interview we talked about his trading style and some of the sectors and stocks he is watching now.
Jim Rogers gives a Lecture at Baliol College, Oxford.