Not a Day to Dive Back In

As someone just said on CNBC, no one becomes rich by buying on the 4th up day! Despite the fact that it looks like some risk appetite is returning to the market, the Enterprising Investor should have already made his purchases (if the analysis justified to do so), not dive in now!

Most of the buying so far has been due to short covering and most of the fundamental issues affecting the economy and financial markets have not changed this week. Are some of the banks all of a sudden worth almost double the price they were trading for last Friday? Is there less risk? Do we have more clarity on their balance sheets and their exposures? Hmmm…

Keep on doing your homework, but we are extremely skeptical of all those market commentators that are saying to get back in and that the time has come to put money back in the markets. We are still adopting a wait and see attitude and would ideally be ready to take some positions we like, but unless something fundamental changes in the state of the economy, we are looking to do so at or below 52-week lows.

Comments

[speeddaimon:]

That is exactly the mentality that I am taking. I don't see the economy turning around yet (or in 6 months), I don't feel that the market has reached capitulation yet, and I feel like everything is pointing to, at least, one more major drop (say S&P to 600). Thats when I start pouring money back in.

Mar 13 01:25 PM

[Tricky:]

^ exactly where I am at too, we'll see how that pans out

Mar 13 01:27 PM

[Gainer:]

That's correct. Actualy this would be a good idea to
short those huge gainer over the past four days, like
AMZN, AZO ETC.

Mar 13 02:08 PM

[Nuh-huh:]

You're missing it. The market, particularly the banks and insurers, are oversold. If you think the banks are going to all blow up, take you cash and buy torches, pitchforks, guns and a tanker-truck full of gasoline. Otherwise, put your money back to work.

Mar 13 02:31 PM

[Google Fan:]

The best thing to do right now is to sell half your position that was hopefully taken last Friday. This way, if you are wrong, and the market rally's further you are making money, if it tanks again, you have dry powder to buy more. Greed and fear folks, balance the two, and then you make good solid gains.

Mar 13 02:36 PM

[The AntiCramer:]

They were oversold. We've yet to see a 6% rally in a bull market. Good luck my friend.


On Mar 13 02:31 PM Nuh-huh wrote:

> You're missing it. The market, particularly the banks and insurers,
> are oversold. If you think the banks are going to all blow up, take
> you cash and buy torches, pitchforks, guns and a tanker-truck full
> of gasoline. Otherwise, put your money back to work.

Mar 13 05:02 PM

[jasonjim:]

Financials and oil stocks are ridiculously oversold and their prices reflect that. Buy now and even if the market tanks again you still have pretty low cost assets that will be worth something down the road when the market fully recovers. Don't buy now and you could end up missing the boat entirely while you are busy being negative about everything.

Mar 14 09:39 AM

[Old Trader:]

Fwiw, I've used the run up to unload the last couple of dogs in the portfolio, and am content to add cash, and either get back into SDS, depending on how aggressively bearish I'm feeling, or just wait until the S&P drops back sub-700 and start nibbling on longs.

old trader

Mar 14 08:49 PM

[mariocavolo:]

there's alot of technical support for a rally to 800 or higher SHORT TERM...there is a huge level of shorts who will squeeze this bear market rally up to that level, PLUS there IS institutional/broker desk program trading that has already kicked in, REGARDLESS of the fundamentals....then the plunge continues as it should because as noted by most of you, the economic fundamentals are a disaster and worsening in the coming weeks and months...I suspect the next quarterly earnings reports will be the trigger that starts the plunge again if not sooner...

Mar 15 12:24 AM

[investor88:]

Agree with Mariocavolo views. Even in a severe bear market, there are fierce bear rallies.

Mar 15 04:48 AM

[DavyJ:]

Re: "As someone just said on CNBC, no one becomes rich by buying on the 4th up day!"

So is the trick to buy on down days? There has been no shortage of them this year.

Mar 15 08:41 PM

[DavyJ:]

By the way, how do you know that "Most of the buying so far has been due to short covering"?

Mar 15 08:48 PM