Did US Stock Market Hit the Bottom on July 15 ??

Question

Dow Jones went down to 10962 on July 15, 2008.

Is it the right timing to get into the market ?

Or, will it retest the low before going higher ?

Answer 1

Hey Duke!

I liked Common Sense's answer ... shows he/she also has a sense of humor.

I think we are in a bear market, but what we are experiencing is a profound shift in where the big boys invest.  They are fleeing anything related to energy (except some alt.energy), and headed ... where?

The answer to that question will let you know where to invest.  Obviously, some are moving toward the financials, but I'm still in a mood to continue to short the financials.  I think if you watch some ETFs, they will tell you where the money is heading.  BioTech looks good right now.  Check out a one month chart of BBH.

To answer the last part about the right timing, I think this market will retest the lows before finally moving out of this bearish phase.  However, timing the market is really a fool's game.  Usually when I'm in a Holding Pattern, like I am right now, I use this time to do some further research ... or cut the grass.

Keep a long-term view in mind unless you have half a day to sit in front of a computer and make instant decisions.  Plus all the time spent watching a company or sector daily.  The long-term view will help you to answer such questions as "will the banks ever recover?", or "will oil go back up?"

Place your money where the answers to those types of questions indicate you should.  Just remember to buy companies with solid financials and a proven management team ... well, a good one, like Jamie Diamond of JPM, and not that clown at C, although he is "proven," too.

I wish you luck!

Uppity Wench

Answer 2

Long ago someone passed me a classic method for commodity trading called the Turtle Rules. I won't go through the whole story but one feature was that if the item (a futures contract that you were watching closely) shows the (using comparable common stock trading tools) 50 day moving average rising above the 200 day average then you want to get into that item.

In effect it is a sensible piece of mathematics, so if the stock price has been rising so that it affects a comparatively uncommon upward trend, then ride the trend.

Now there are several other rules, some of which can be applied to stocks, some can't (or at least without stretching some definitions and descriptions a bit). But this can be applied for stocks and industry sectors (particularly if you are following ETFs). The averages have been heavily weighted down. This is essentially what sailors used to do, set sail at the rising tide.

Rarely does anyone trade "the market", so maybe this will give you some ideas that can help you trade (or maybe just find) that little piece of the market you are interested in. Oh, another thing, they never, ever, opened a position without knowing exactly where they wanted to sell, particularly when the market moved against them. They also strictly limited the share of money designated to a single position, in part for safety, and in part because they may test the water for that one contract again, really soon. They were expecting to lose several times before they found the right wave to ride.

Just some ideas to ponder.

Answer 3

Did the market hit bottom on July 15? Maybe, maybe not.

The best time to get in the market is at the lower end of a time frame; but, who knows when that occurs?  We only know it after the fact.

The smart play is to continuously invest in the market at set times and amounts.  That way you weather the lows and ride the increase.  I know a fellow who was afraid to invest, because the market may go down.  I told him to think of the down turns as mark downs.  At that point you are buying "sale" priced stocks.

You sound as if you want to "get rich quick" but the only ones that get rich are your broker and Uncle Sam.

Think long term, not short term and purchase good stocks or mutual funds.  Never chase the hot picks; by the time you see that they are hot, they have already made their run up.

Answer 4

I "listen to the market". The times the market goes up.. it's on good volume. When it goes down, it's low volume. There are higher highs, and higher lows.

This may be a bull run in a bear market. I've added to positions and I've tightened my stops.  I will be able to further answer your question in five years.

http://www.alphatrends.net/

http://www.tradingwithtk.com/

Answer 5

If someone knew the answer to that question , do you think the information would be divulged ? Wouldn't the seer know that this is the time to pawn the house and lot and invest the bundle.?