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

Hot Technology Stocks (Dec/2010)

Here are two technology stocks that picked up a lot of attention in year 2010 in contrast to one that did not.

Recognizing and Interpreting Candlestick Patterns

This article covers two approaches to dealing with candlestick technical analysis. The trader can learn the candlestick patterns, the situations in which they translate into trend reversals, and apply the analysis to trading decisions. Or the trader can use the assistance of software.

Paper Trading versus Real Trading

This article compares paper trading with trading involving real money. Failure in paper trading is a sign that the person should not partake in real trading. Success in paper trading does not necessarily mean a person will succeed in real trading.

Rule of Thumb on How Much Loss to Take

This article provides insights into how to manage how much loss to take in stock trading.

React to Technical Analysis Indicators to Trade the Rise and Drop in Stock Prices

This article examines the approach of trading stock price cycles as a means to achieve repeated trading profits in short-term trading. Take what the stock markets will give you.

Visit igtsoft.com for
your photography needs.

Columbine



Extinction is the rule. Survival is the exception. - Carl Sagan