Middle East Turmoil

Eyes are on countries such as Egypt and Libya to name just two. Stock investors are rightly concerned about the events they see unfolding. Concern over fuel prices are extreme as people see the price of a barrel of oil continue to rise. As I have stressed many times markets bottom when news is bad and we must be ready to pounce if buying on volume resumes.

As the graph below shows courtesy of www.bigcharts.com we had a high volume sell off which is certainly not good news. However note that major indexes are still above the all important 50 day moving average.

The investor at this point should watch carefully for the indexes to hold above that moving average and continue to maintain a list of stocks that are consolidating during this market down turn. Stocks that can consolidate will be the first to rise if the stock market strengthens. Try and maintain a list of stocks that have moved up and are now moving sideways rather than breaking down. If the down trend continues do not buy but continue to add to this list as you find more stocks holding up. Remove from your list the stocks that break down.