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Why this market keeps going higher? (+ think May 2009)...

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October 12, 2010 – Comments (11) | RELATED TICKERS: BYD , AGM , CPE

Well, it's on a mission. It has a job to do.

It needs to prove that this statement from this pitch is correct.

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On a more serious note:

Do you remember the post from May of 2010 DOW 9,000 or DOW 14,000? How abouth both? ?

And do you rememeber what was said in that post?

Basically, it was said that the market will experience a very severe correction that will last from May to July, but that it will come back vigorously and will reach new highs.

Well, DOW didn't fall all the way to 9000 (but it did to 9700), and by the same token, I also said that I don't think DOW 14,000 is going to happen.

However, the point was that the market was just entering into a correction mode (not the double dip that many were predicting), and that it will reach new highs soon afterwards.

I also think that post ended with something like "Make sure to come back in August", which now we know, was a little bit too early.

Still, coming back in August, I think was better than sitting on the sidelines (or shorting the market) until October, waiting for the double dip to happen

One more thing.

I'm very excited about the market and the future, which does scare me a little bit.

I think the correction that we had in May-August, gave us a chance to scoop up bargains not seen since April of 2009.

In other words, buying stocks in September of 2010 was like buying stocks in April of 2009 - you could buy a piece of crap on a stick and it would be up 50+% a month later.

Right now, I'd say prices are comparable to May of 2009. There are still plenty of bargains left (a lot of stocks 30-40% off their 52W highs), but everyone buying now is a month late (which doesn't mean too late, just that one has to be more careful and have more reasonable expectations).

And that would be it for this post, Fools.

Sit back and enjoy the ride to DOW 12,900... or so... :) 

11 Comments – Post Your Own

#1) On October 12, 2010 at 5:41 PM, simplemts (< 20) wrote:

What does your crystal ball say at 12,900, 10% correction... 20% correction, flat?

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#2) On October 12, 2010 at 5:58 PM, Momentum21 (96.83) wrote:

What I like about this market lately is how the small caps and value plays are outperforming in a big way...this worked against my portfolio when the panic set in but is a thing of beauty now.

I think we are in for a new phase of decreased volatility that will wind up frustrating many who are just following the indices and trading leveraged etfs.

I think we also start to see more divergences among sectors and individual stocks. Bears will claim lack of conviction...bulls will deny the double-dip...both will be right...

Time will tell though, right...good luck man!   

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#3) On October 12, 2010 at 6:30 PM, davejh23 (< 20) wrote:

"I think we are in for a new phase of decreased volatility that will wind up frustrating many who are just following the indices and trading leveraged etfs."

You could be right, the VIX charts look broken right now...of course it could be set to break out right here.  If the dollar turns higher here, and the QE2 annoucement doesn't come in as expected, the market could crash...I was just expecting a decent correction a few weeks back, but insider selling has been insane since then...I won't be buying anything as long as this continues.  I wouldn't be suprised to see the market inch higher into the end of the month, and then fall 15%+.  12,900?...not without a steep correction first...maybe 11,200, then back to 10,000.

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#4) On October 12, 2010 at 6:32 PM, dragonLZ (99.67) wrote:

simplemts, right now, my crystal ball is not working. I'll continue shaking it and as soon as it starts working again, I'll let you know. :)

Momentum21, I actually think the rise will be steep and suprisingly easy for bulls (yes, I'm that stupid). That's actually the reason I posted this. Market hasn't reach the new highs yet, but I'm convinced it will.

And it will continue going higher, is my opinion...

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#5) On October 12, 2010 at 6:51 PM, starbucks4ever (98.98) wrote:

I already see the bargains begin to disappear...

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#6) On October 12, 2010 at 8:21 PM, portefeuille (99.44) wrote:

this is probably a good place to post the usual chart ...



enlarge

 

explanatory chart.



enlarge

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#7) On October 12, 2010 at 8:36 PM, dragonLZ (99.67) wrote:

I already see the bargains begin to disappear...

zloj, I think there are still many left.

For example, the 3 stocks / ticker symbols in this post.

I can't believe BYD, AGM, and CPE are still so cheap. All three 40% off their 52W highs... (but they did start to move)... 

 

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#8) On October 12, 2010 at 8:37 PM, dragonLZ (99.67) wrote:

this is probably a good place to post the usual chart ...

portefeuille, you know it: Mi casa e su casa...  :)

 

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#9) On October 13, 2010 at 12:25 AM, kstarich (30.66) wrote:

Dragon

I like your analysis...I think you will be right.

The astrology suggests big up November to mid December.  December 22nd  tops out and correction into Spring and thats when inflation starts to crank up and markets go up again.

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#10) On October 13, 2010 at 7:33 AM, dragonLZ (99.67) wrote:

kstarich, it makes me feel better knowing that starts are aligned too. Thanks. :)

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#11) On October 13, 2010 at 7:47 AM, dragonLZ (99.67) wrote:

Here is an example of a stock that tells the "story" of this post:

Officemax Inc. (OMX)

It is up 55% since Sept. 1, 2010 (was up 9% yesterday), but is still 21% off its 52W high.

More stocks like this one can be found in my value portfolio...

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