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The Stock Market Event You Need to Guard Against Right Now

Tuesday, November 27th, 2012
By for Profit Confidential

Stock Market Event You Need to GuardWe will soon be heading into the final month of 2012. Nothing really surprised me this year, as I thought trading might be up but also cautious. (Read “My Market View: A Risky Start to 2012.”) The S&P 500 is on a five-day winning streak. Is this the beginning of a sustainable rally? I say no, and I firmly believe stocks will find it difficult to advance higher.

Don’t get too excited on the rally and let your guard down. The reality is that the current stock market is prone to downside selling.

Sales on Black Friday by all accounts were fine, but not spectacular. I will provide a complete analysis once the numbers are in for Cyber Monday.

There is also the uncertainty of the pending fiscal cliff. We will see tax increases and budgetary cuts to areas such as government spending that will impact the middle class and, ultimately, its ability and desire to spend.

Then there’s the big financial mess in the eurozone. Greece has yet to receive its next loan, but the country will need it to pay off its initial loan. A mess is an understatement here. You also have the recession in Spain and an unemployment rate over 25%. Moreover, there are another five eurozone countries in a recession, and the eurozone is headed into its own recession.

In all, this is not a time to get too comfortable in the equities market.

  • The Great Crash of 2014

    A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

    In fact, we are predicting this crash will be even more devastating than the 1929 crash...

    ...the ramifications of which will hit the economy and Americans deeper than anything we've ever seen.

    We feel so strongly this is going to happen, we've produced a video to warn investors called, "The Great Crash of 2014."

    Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

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The reality is that, based on what we have seen so far in the third-quarter earnings season, the revenue growth is muted, as America tries to get its consumers to spend. Black Friday and the holiday shopping season will be critical; albeit, I cannot say I’m brimming with confidence.

My most valuable advice for you is to avoid trying to time the market, as this is difficult. A prudent investment strategy is to make sure you have some trading plans in place.

Having a good investment strategy that includes risk management is the key to stock market success, especially at this time, as I outlined earlier.

The most important tenet in trading is preserving your investable capital via the use of risk management. The last thing you want to happen to you is to trade sloppily, losing your tradable capital. You can avoid this by following a simple investment strategy.

When the price of a stock trends higher, you should think about a potential exit strategy. This investment strategy does not mean liquidating profitable trades, but rather protecting your profits. One investment strategy is to take some profits after a surge in the stock. Right now is a good opportunity, since chances are the market will likely retrench.

Another key investment strategy is the use of mental or physical stop-loss limits. The reality is that no one is perfect in trading; I have made mistakes and so have many of you.

For those who are familiar with options, take a look at put options as a hedge against market weakness.

If you are already adhering to risk management within an investment strategy plan, good for you; otherwise, learn them, and it will make you a better and more successful trader.

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George Leong - Financial Planner, ConsultantGeorge Leong, B. Comm. is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services. Add George Leong to your Google+ circles

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.