Federal Reserve Tries to Keep Temparature Cool
The recent down turn of the markets means new models must be employed to remain, on top of your portfolio. As rally season looms the final and most important quarter of the year.
London, United Kingdom, September 24, 2015 (Newswire.com) - With the U.S stock market trying to surpass its all-time highs, many investors still don’t see the problem. After all, if the market is going up.However as Newton correctly predicted, what goes up will eventually come down.
The problem is that waiting until a bear market is publicly announced, means lost profits. Always take profits.
Honor like the hawk must go hooded.
Don , Merrick
If the S&P 500 drops below 1,960, the technical damage will be so great it will be hard to recover. (in a worst-scenario, all technical levels could be breached in a day or two of trading ) If there is no bounce, this will also generate automatic computer-selling programs.
Rallies have less energy: There will be lower lows and lower highs on a chart, and eventually the market will break hard to the downside. If the rallies are sluggish and heavy, this is a clue the market is rolling over. In a bear market, there are lifeless rallies in a low-volume environment.
Panic selling: Fearful investors who have been patient will throw in the towel and sell what they still own. Although investors are told that bear markets are buying opportunities, most investors do not have the patience or discipline to hold, let alone the courage to buy when the market stops plunging. (Note: Don’t buy on the way down.) The best example is "Black Monday" with 85% of investors being retail. The effects of the panic amongst investors who used the Shanghai market like a current account was like a tidal wave of bad choices causing untold damage to the economic outlook for China.
Bears gain respect: As the decline worsens, bearish forecasters are no longer ridiculed, while optimistic bullish strategists who had made hopeful predictions are challenged. In the final stages of a bear market, the bullish investors are mocked.
Sell when you can
Those who have been paying attention to the market, know there are other subtle clues a bear market is getting closer. Many in the media are obsessed with bear market definitions (i.e. 20% downturn), but protecting your investments should be your first priority. Remember the old Wall Street adage: “Sell when you can, not when you have to.” To evaluate a good time to enter (or exit) a position is by probing, by investing a small amount of money to test whether the position becomes profitable.
The biggest question faced is if this represents the turning of the corner.
The shift in sentiment would mean that previous economic models would be redundant.