Are We There Yet?
29th June 2008
Every momentum indicator known to man is telling us that this market is oversold. The only problem with oversold markets is that they can stay that way for a long time. This could be one of those times. The DJIA went crashing though the 12,000 level like it was not even there. You might recall that this level managed to hold up in March 2008, January 2008, and March of 2007. We have not seen these levels since the middle of 2006.
Buy and Hold investors may actually be losing ground over the last two years. When you consider the drop in home values over the last couple of years, the economy certainly is not painting a pretty picture. Had you been reading our blog in 2008, you might have been inclined to take some of your equity investments off the table. If you do not like to babysit your retirement funds, a well diversified portfolio would have helped you weather the storm. One place for a good read on asset allocation is the Insightful Investing Newsletter.
We could certainly see a bounce here that active traders can use to take advantage of some new bearish option trades, but for most of us this might be a good week to enjoy the upcoming holiday. No junior, I do not think we are there yet. If your are good boy, we might stop for a minute and pick up an ice cream cone, and you’d better enjoy it while you can. We may still have a long way to go, like maybe another 500 points down for the DJIA. Let’s hope not, but it would not surprise me at all. Maybe we can get the stock market a GPS, after all, nothing else seems to be helping.
JD
