Back To Cautionary Mode

In my July 7 article, I wrote:

Two-thirds of the evidence in this small piece of the market puzzle says buying is the move to make now. The other one third shows that even if buying now is early, it’s probably not terribly early.

Nobody ever knows the exact bottom. You’re always going to be a little early or a little late, depending on how you approach the analysis. In other words, the best you should hope for is to get close. The numbers now say that we’re close.

Indeed, we were. On July 15, the S&P; 500 tracking ETF SPY bottomed at $121 and then topped out at $131 on August 11:

http://charts.wikinvest.com/WikiChartMini.swf


It was a nice one-month rally or so, and now it looks like we’re back to cautionary mode.

The S&P; 500’s rising wedge shown in the chart above is a bearish sign, as it usually breaks away to the downside. The Nasdaq poked its head above its bear market trendline from last October, but then quickly headed lower again. Several indexes have bounced off resistance at their 200-day moving average lines.

I would put buying on hold, and consider setting stops under profits you made in the summer rally. There’ll be a better chance to buy later.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.


  • Included with Your Subscription:



    $200/year
    Save 17%



    $20/month
    Pay as you go
    Or sign up to receive free email and learn more about the system.
Bestselling Financial Author