Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Is It Extra Innings or Game Over for the Stock Market?

By

Stay defensive, wait for a correction before swinging for the fences in stocks.

PrintPRINT
Ninth Inning, Extra Innings, or Game Over?

As the stock market enters the second week of its most famous month of the year, one has to wonder if we're in the last inning of the game for this powerful market rally. The S&P 500 and NASDAQ have had a spectacular run since the March 2009 lows, so it would be natural -- and even healthy -- for the market to pause and have a 5-7% correction.

However, the stock market has decoupled from economic realities, so all market bears must beware that it could very well go into extra innings before a more serious correction or crash comes later in 2009 or early 2010. This stock market in 2009 has an 88% correlation to the 2003 market, so any serious correction may not happen until 2010. This assumes we continue to follow the 2003-2004 market paths.

Below 869 and it's Lights Out and Game Over


The fact of the matter is that price is truth and all else is commentary. Fighting the Fed and the tape isn't a wise or profitable thing to do. It we have a serious correction and close under 991 on the S&P 500, then look for a very volatile and potentially bloody end to the year in stocks.

For secular-thinking bears, a close below 869 will confirm that it's game over for the bulls and game on for the bears. A break below 869 will be confirmation that we're headed significantly south, and that this recent move was, in fact, a bear market rally versus a new secular bull market. Right now, the market is technically bullish with a giant inverse head-and-shoulders bottom in place on the weekly charts, so don't be surprised if 1125-1200 happens before the right shoulder is tested or broken at 875 on the S&P 500.

Gold Stocks Heading into the Seventh-Inning Stretch Until November

For those that are concerned about the overall market and economy, I'd suggest looking at the big secular bull market in gold and gold stocks. Seasonally, gold and gold stocks should very shortly start a decent-sized correction into early November, and that will be the time to buy.
< Previous
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE