Hey guys,
That Elliot Wave Theory is pretty interesting (and seemingly complicated) stuff! Either way, the indicators I followed flashed a bear market signal about 2 weeks ago on March 27. Actually, these indicators are basically the same ones followed by the Cabot Market Letter, who may have had some trouble selecting stocks but have always been right on in predicting major swings in the market.
It's my belief this is a bear market. The positive earnings surprises were nice today, but what is really going on here is people are revaluing corporations. So what if Coke beat estimates by a little if they're trading at 35x earnings!
Bear markets can be brutal and drawn out, killing profits acquired during the past couple of years. Or they can be swift and sharp, shocking investors in a heartbeat. The big problem I foresee is many people will still go ahead and buy, say, Intel, because it seems like a good buy at 15x earnings, etc. Yet fundamentals sometimes don't matter in bear markets just like they don't matter in bull markets at times (I'm referring to things like last springs small cap bonanza and the general overvaluedness of 75% of blue chips before this correction).
Back to the point, I think the Dow is heading for 5600 before it stages a rally of more than 150-200 points. After that, who knows? But for now, cash is king! Don't buy on dips unless you're a good trader!
acey |
