Tuesday, March 17, 2009

At The Opening Bell

This is, after all, a place where semi-trained monkeys fling darts at the wall to pick stocks so every now and then people ask us if it's time to buy or time to sell. We don't believe in giving or taking stock tips, but we do believe that it doesn't hurt to talk about general market conditions.

Much was made of last week's abrupt rise in the equity markets. Technically speaking, the markets confirmed a new rally during last Thursday's trading. But be careful with that information-- the last few confirmed rallies have died quick deaths this quarter. A year-end rally ended January 8th. A month-end rally lasted exactly two days in January. Another confirmation came on February 9th and was over two days later. From February 11th on we've been in a nasty correction within the bear market. After a month of almost constant selling, some of it quite heavy, there is a psychological desire to have it all be over. But, in markets, unlike politics, HOPE is not a strategy.

What's happened since the Thursday confirmation? First, a tepid Friday followed by a Monday distribution day, distribution meaning a down market (NASDAQ) in higher volume. That's a sign that the managers of big portfolios were taking some profits from last week's quick gains. Will the selling continue or will buyers take over? Hard to tell, but a distribution day in the first couple days of a rally isn't a positive sign. No matter what one must be nimble. It's a bear market and any rallies will likely be quick.