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2-5-10 Respect the Downside Momentum

1:00pm   (originally posted on Kudrna's Stock Market Blog)  

Nasty action out there.  The momentum is to the downside and you have to respect it.  I’m trying not to get in the way of the selling pressure…I don’t want to incur more losses than necessary so I don't have to recoup a lot when the market turns bullish again.  We were in a bullish market longer than most anticipated and we are probably going to be in a bear market longer than most anticipate.  That’s just how it typically works folks…wish I could tell you to put your money to work cause the economy is getting better based on the sketchy job reports, so says CNBC.  Maybe I’d have more friends in the meantime like CNBC (until you lose money) if I was able to tell everyone to be bullish and jump in.

What did I just hear on CNBC?  Buy and Hold advice.  While I don’t always agree with Cramer…HEED HIS ADVICE.  Do not play the buy and hold game…that is a disadvantage to the small individual investor.  Why would you put investments in the market when the momentum is to the downside?  We may get a small bounce but so far any bounces have been met with lots of selling.  Respect that.  Unless you are running a trade with tight stops…be wary of over committing funds to the market until we see some positive action.

Values look great out there today but they’ll probably look even better next week if this trend continues.  Good luck out there.


Disclosure: No stocks mentioned