Keep an Eye on this Crucial Index
Tuesday, November 11th, 2008
By Mitchell Clark, B.Comm. for Profit Confidential
One figure is crucial for the stock market over the very short term. The number is 1,200. If the S&P 500 Index moves below this level and stays there for a while, the current bear market could get a lot worse. In my mind, this is a key technical indicator and we can only wait and watch to see what happens.
Not surprisingly, sentiment is just plain awful right now, which makes it very tough for investors looking to take on new positions. The market’s not even trading on the price of oil anymore and inflation is like a side issue. No, it’s the health of the financial system all the way, and this has the potential to keep stocks in a bear market well into next year — or the next year after that!
If you’re speculating in this market, you’ve got to be very careful. Most individual investors I talk to aren’t even participating. A lot of money is in cash right now, as many investors just don’t want to take a chance on this market.
I’ve written previously about the plethora of good value stocks available to investors in this market. Of course, what a bear market does is make those good value stocks even more attractive. Right now, there is no end game for this market. There is no solution to turn things around.
Policy makers also have their hands tied because of the interest-rate-inflation relationship. No, the only way for the current situation to improve is for some institutions to fail, the housing market to get back into balance, and the government to rein in some spending.
The problem for me in this bear market is that I’m getting impatient. This bear market is taking its time and it’s almost been a year now. We no end in sight, I think it’s very reasonable to assume that the bear market will stay with us for quite a while yet.
Next Post: Great Depression and $200/Barrel Oil, Do You Believe Them?Previous Post: No Post-Election Boost for Us
Tags: bear market, stock market
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Mitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.




