Stocks Bear Market Returns With a Vengeance

By: Christopher_Quigley

The bear has returned with a vengeance. It looks like the Paulson bailout package was too little too late. The lines in all the major averages that were being drawn since June have now been crashed to the downside. Thus our decision to wait on the sideline last month has been vindicated. It was one of the worst stock market months in years and it is bound to get much uglier before a bottom is reached. Hopefully capitulation will come sooner rather than later.

In general terms never has there been so much bad news. On all fronts commodities, financials, autos, retail, transports and tech the news and outlook is terrible. With Dow theory in mind the Transport average had a very negative move on Thursday the 2nd . This indicates that the confirmation signal that we were looking for is now in place and the pulse downward has gained momentum.

When we look to the Industrials the breakdown has really started at 10500 with no real support available until the 7500 area. To reach this level would constitute a crash in any mans language but the point of the matter is that all significant moving averages have been broken thus there is no technical marker around to psychologically break this fall.

For the trader the trend is definitely down but the best time to place money on any short is in any upward rally but the general movement will be choppy and thus hard on the nerves. For the more cautious investor I would wait for the November elections to be over and then start moving into long quality positions once I see a bottom tested. Areas to look at would be healthcare, consumer staples and energy.

By Christopher M. Quigley
B.Sc., M.M.I.I. Grad., M.A.
http://www.wealthbuilder.ie

Mr. Quigley is 46 years of age and holds a Batchelor Degree in Management from Trinity College/College of Commerce, Dublin and is a graduate of the Marketing Institute of Ireland. He commenced investing in the Stock Market in San Francisco, California where he lived for 6 years. Now based in Dublin, Mr. Quigley actively trades utilising the principles set out in the modules above. This Wealthbuilder course has been developed over the last 9 years as a result of research, study, experience and successful application.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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