Code Yellow - Proceed with caution!
Just a quick note of caution. I normally only write a market momentum blog once a week but the last 2 days of market action should be looked at. Hear is why I'm cautious:
The Value Line Index, an index of 1700 stocks is presently trending below its 20 day moving average. According to the BarChart market momentum page today 59.52% of all the stocks 6000+ they follow closed below their 20 day moving average. The 20 day new high/low ratio was 414/830 - the first time in a while that there were not more new highs than new lows.
Am I panicking? No! My stop losses are always set at the 50 day moving averages. That point hasn't been hit yet. I just won't replace positions if my stop losses trigger till I see a trend.
What's my advice? You have to make up your own mind. Is this a trend and just the start of the doomsayers inevitable retrenchment or is this just a blip and a good buying opportunity to pick up some positions on a dip? Let's hear your comments below or email to Financialtides@gmail.com.
Jim Van Meerten is an investor who give his financial opinions on Financial Tides, MSN Top Stock Blogs and Seeking Alpha.