Stock Market Pulse and Sentiment Q1/2009
With the general market down 50% and financials and housing down 80% over the past year and the market indices down at 12-year lows, there is market sentiment that we must be near the bottom.
From a long-term investing perspective, this is a good time to buy in, although the entry into positions should be gradual to account for further price drops. Also, dollar-cost averaging (buying a fixed dollar amount at regular intervals) can be employed.
Notable bear market players are saying a bear-market rally is coming and some are even saying a big rally. So, the sentiment is that the markets are due for a bounce with the open question on how big a bounce. Some have disclosed that they have sold their short positions and are making a play on the long side.
For brokers and advisors who are recommending sell at this time, I tend to think they are wrong. It continues to baffle me why people actually pay brokers and advisors for that kind of recommendation. But we don’t know, they could be right and the rally crowd is wrong.
None of this stock market sentiment is to suggest that the recession is over. The underlying economy is still in very bad shape. However, the sentiment of the stock market participants is that the markets have gone low enough (how much lower can it get?) and that it is time to reverse direction.
For short-term traders, it would seem making trades on the long position is the proper move for now and that shorting is on the high-risk side. Follow the technical analysis indicators for the best read on trend reversals to the upside.
Comments are for informational purpose only and do not constitute stock trading recommendations.
More you might like
Candlestick Technical Analysis : An Introduction
This article provides an introduction to Japanese candlesticks – what they are, how they are used in charting and the technical analysis of candlestick patterns.
IBM Acquisition of Sun Microsystems - Trading JAVA
This article covers the reported IBM acquisition of Sun Microsystems. On the stock trading side, there are some interesting points to discuss.
Ranting on Stock Market Day Trading (March/2009)
This article covers my ranting on stock market day trading in the month of March/2009. Main lessons learned are listed to be remembered.
Trading Gold Stocks in 2009
This article examines various elements of importance for trading gold stocks.
Trading with a Trend Following System
This article provides insights into the thought process of a person engaged in learning about stock market trading.
