THURSDAY NIGHT REVIEW – TIME TO BUY?
I wrote Thursday afternoon, “My guess is that the S&P
500 made a tradable bottom that will result in significant movement up for a
week or more. The catch is that almost any bad news could trip it up. Longer term (a couple of weeks) I think the
S&P 500 needs to retest the low.” I’ve looked over the data and here are
some more details: Technically, the correction may be over. Internals are indicating a turnaround. Selling in the S&P 500 slacked while
there was buying in the smaller cap stocks indicated by the improving %-of
stocks advancing and the improving Russell 2000. There was also a significant upside reversal in
New-hi/new-lo data.
The markets should move up strongly from here for several
days - if they do; correction over. If
they don’t, my earlier guess of a test of 1741 seems very likely.
I tried to convince myself to issue a BUY signal and get
fully invested again. In the end, I
decided to trade the bounce with short-term money and remain mostly in cash in
the 401k. Risk takers may
want to go back in the market and be fully invested. Conservative investors may want to stay
out. I’m in between. My guess is that we
see a 5-10% bounce and then it will be time to re-evaluate.
