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Taking a market pulse: Is it dying or comming back to life again?

March 14th, 2006 at 05:14 am

Today's Acton:

The major indexes were mixed. Most were up a small amount, except for the Dow, which was down slightly. Volume was not decisive. If this continues I think a stalling or "thinning out" action may take place and the market will not achieve the 1-2% gain that I predicted on 3/10. We will just have wait and see.

My Take on things:

I think Money Markets and CDs are best for now, The stock market may present some opportunities, but I am not biting at this time. I am bearish on real estate and bonds.

Why the big view matters:

Some think that it comes down to some methodology or scheme to finding a few good stocks and letting them run whether it be based on technical factors, on the fundamentals or my preference, both. But I do not always take a long position in stocks. It is so much easier to get a good payday when the general market is moving (or about to move) in the right direction at the same time I want to buy. Why? because the odds improve on picking a winners when most stocks are moving (even better yet, about to move) in an upward direction, because there are simply more of them presenting themselves as dynamite investment opportunities at that time.

For example: My mutual funds recently returned an average of about 10 percent for about the time I held them from October of last year to February this year. When I bought: technical indicators were telling me that institutional investors were coming in the market to buy on big volume, probably based on the important fundamental of good earnings news. When I sold, I thought the market would be flat to lower due to the interest rate concerns and earnings no longer a catalyst. Since then there has some minor ups and downs with nothing really to write home about either way.

I have learned about a number of ways to tell, usually with-in a few percentage points, when the major indexes may be near the top or close to a bottom, the best times to conduct transactions. Does it work every time? No. But it usually works, and when I am wrong I have been able to reposition my overall investment strategy without taking on significant damage to my portfolio.

In the coming weeks I will share with you how to get the pulse of the overall market. I feel this is a very important ingredient when deciding on whether or to be in stocks at all.

When the market is down, 3 out 4 stocks are losers. I could get better odds in Vegas.

Feel free to discuss what works for you. Whether it be a particular stock pick or a device on gauging stocks or the market in general. Anything can be fair game. All just for fun.

Today's TIP:

Check the leaders. This can done in reading about Investor's business daily IBD 100 index and Big Picture article. The paper will tell you if the index is experiencing trouble. Today's edition noted quite a few of the leaders were down last week; And two weeks before that they said the same thing. this is important because the condition of leaders are most often a leading indicator to the general performance of the market.


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