As I noted last week, the
chart-trend is up now and it has been since that pesky 1278 low. (I’ll log that one in my correction worksheet
so in similar situations I’ll buy at the low.)
Most importantly, my analysis via the NTSM system indicates a BUY as of
Friday’s close. As previously blogged,
both Price and Volume are positive and that is enough to trip the buy signal.
Furthermore, statistical analysis of price-volume indicates the correction is
probably over. So we have a BUY. Along those lines…
Here’s a comment from a
poster on a day-trader discussion board: “…after 25 years of doing this,
have seen how stock prices move up into the beginning of a recession, but
bottom at the bottom of the recession, As in, prices don’t fall till the actual
recession begins, but they start rising right when the bottom is happening.”
That’s a good observation. It’s
important to remember, even in bear markets there can be some fairly
significant up trends. So I will get
back in the market today, Monday, but I will keep my invested position at only
50% stocks. I think this is a risky time
to be placing too large a bet on the stock market. 50% stock allocation looks good to me for
now. The upside here might be 15%-20%
max. The downside: maybe 40% lower than
now. The market could drop to 850 (or
even lower), but will that happen in this cycle? I don’t know.
If the market suddenly decides it’s going down, the NTSM analysis should get me out fairly quickly. Worst case would be a slow meltdown from here that would not trigger the NTSM analysis. That is less likely than a panic if the news continues to get worse.
Unless the S&P 500
drops significantly below 1330, the trend is still up.
Bottom line: I’m “In” at 50% stock allocation at the close on Monday. Cue Kenny Rogers: “You got to know when to
hold ‘em. Know when to fold em.” It is a bit of a gamble, but that’s also true
of staying out of the market. We’ll
see. Decide for yourself. If you can’t sleep at night, stay out.
