The markets took it on the chin yesterday with all major indexes heading sharply south and honing in on last November’s lows. Actually, the Dow came within 31 hundredth of a point of taking out the November 20th level.
The November low of 752 of the S&P; 500 held up so far, but we have moved within striking distance. Causing this ruckus was the fear and worry that the stimulus package most likely won’t eliminate any recession pains.
In addition, Wall Street traders may have finally woken up to the fact that there is a recession going on around the world that seems to be increasing in speed as well as in magnitude and that other stimulus packages may not work either.
To readers of this blog, this should come as no surprise as I have questioned the wisdom of any stimulus or bailout program from the very beginning. It now remains to be seen if there is more follow through to the downside. If the 752 level on the S&P; is violated, you could see some indiscriminate selling, since this bottom has been hailed as the real thing.
To be clear, a break below it could bring the widely forecast 600 to 650 level into play, which would be absolutely devastating to the buy-and-hold crowd. Being safely on the sidelines is the only appropriate position during these times of madness.
Comments 10
Ulli: SLV etf is above its 200 day MA. Do you suggest that we can invest in that?
Thanks,
stranger
Stranger,
You can, but be sure to work with a sell stop point in case the trend goes against you.
Ulli…
Many thanks for your always prompt responses.
stranger
YOU HAVE STATED IN YOUR E-MAILS THAT THE MARKET IS ON THE SELL SIDE. WHY WOULD ONE BE ON THE SIDELINE WHEN THE MARKET GOES DOWN FASTER THAN UP. I DO NOT SEE WHY ONE CAN NOT FOLLOW TRADING RULES W/STOPS IF THEY ARE WRONG IN ANY TRADE. IF I BELIEVE THE MARKET OR TRADE THAT DEVELOPES I WILL BE RIGHT THERE TRYING TO BEAT THE PROFESSIONALS. I AM FAIRLY NEW BUT LEARN FAST.
CEW
Sure, as an aggressive investor you most certainly can do that. However, most people are too conservative and prefer being on the sidelines during times of uncertainty.
Ulli…
Being on the sideline can would be a useful tactic if you are 55 and older with your money tied up in the market. If you are a young investor like myself and flush with cash it isn’t a bad time to play. Higher the risk the greater the reward, but we all know it’s all about time and the market will correct itslef
Check out my blog: screamformoney.blogspot.com
Best,
Neil
Ulli said:
“…most people are too conservative and prefer being on the sidelines during times of uncertainty.”
Ulli, in my view this statement should read: …my clients are too conservative and prefer being on the sidelines during times of uncertainty.”
When speaking of “…most people…” I feel that such characterizations as “conservative” do not apply.
Otherwise, wouldn’t this blog be among the most popular on the planet?
G.H.
GH,
You are correct, although I have to include many readers in this observation who have emailed and stated that their prefernce is to be on the sidelines as well.
I think this blog should be the most popular on the planet… 🙂
Ulli…
MOST people are too busy or not savvy enough to play this market. I’ve talked to many in the 40 and up set who have the most to lose who got out. Those who didn’t (that I talk to) wish they had.
I have met one person at my place of work (400 persons in my building) that bought gold..he is faring better than anyone else..but even he was not bold enough to tie up a lot of money in it.
Hi Ulli,
I haven’t run across anyone in the last few months that did not wish they had got out of the market about a year or more ago. I live in a 55 and over Country Club type retirement community and these people HAD a lot of money a year ago.
L.G.